Over Easter an audacious heist was perpetrated. Behind closed doors, a group of men worked methodically on the raid whilst the unwitting property owners enjoyed their Bank Holiday break, completely unaware that they were being fleeced. No one would sound an alarm until it was too late.
But this was no ordinary robbery. There was no jewellery, cash bundles or diamonds to grab as there was at Hatton Garden over the Easter weekend. The prize this time was control of a multibillion-pound business with a 160-year history. It was the theft of co-operative democracy.
We do not need to search through hours of grainy CCTV to work out who is behind this. The transitional board and executive management are responsible, and they have form.
The job was carefully planned. The executives had gained access to the organisation through stealth and cunning over the previous year. They had hollowed out the democratic structures of the Co-op, removed any likely opponents and then got the member directors to hand control of the business to them, as bewildered pensioners might sign over their life savings to complete strangers.
The opportunity had arisen from the shambles of a well-meaning, yet ineffective board, which was incapable of properly controlling the previous management. It needed reform, and quick.
Enter Lord Myners, whose sneering analysis left the elected directors shell shocked and all up for a spot of self-flagellation. The Myners solution was to execute the directors. No more elections to the board, apart from a compromise of three representatives from the owner members. The board agreed and trooped up the steps to the scaffold.
A transitional board was put in place, with new independent directors recruited, including the highly regarded Allan Leighton as independent chair. All that remained to complete this process was to undertake an election for the agreed three member-nominated directors.
Earlier in the year, members had watched the major business disposals and reorganisation, including losing majority control of the Co-operative Bank. To great fanfare, the Co-op Group insisted on the bank maintaining its ethical dimension, inscribing its values into its constitution.
Bank chief executive Niall Booker was passionate, writing for the Guardian about the need to restore trust by invoking the ethical spirit of the Rochdale Pioneers. And then a fortnight ago, we saw the bank award a £5 mpay package to him.
If any publicly owned bank had made such an announcement, we could have expected a shareholder revolt. However, though the Co-op Group remains the biggest individual shareholder in the bank, it does not own it – it is privately controlled by hedge funds. If they want to pay a Premier League salary to the CEO, then it seems that’s up to them.
So as the guardian of ethical values at the bank, the Co-op Group either nodded this deal through, or was powerless to prevent it. As it happens, the group has not bothered to take up the one seat it is entitled to on the bank board, so it is not clear that it even knew until too late.
Then last week, the group’s annual results were published. The remuneration report should worry those who are concerned that the executive should be under the control of the members – the owners of this business.
It revealed that senior executives received double salaries that made most of them cash millionaires overnight. Huge pay-offs were made to some who only worked for the group for a few months – as a result of contracts drawn up in favour of the individuals who benefited. Corporate costs had spiralled, whilst jobs of the lowest paid were cut.
Which takes us back to the Easter job. In private, the new leadership had decided to reinterpret the very essence of co-operative democracy. No longer would it be a process of nomination followed by election, this time only “suitable” candidates would get onto the ballot form.
All member-nominated directors would need to prove their competence to sit on the board. Fair enough. The 60 or so candidates were whittled down, and eventually six names were left. The elected senate had oversight of this part of the process and agreed to the six names going forward to members for election.
What they did not know was that the new leadership had other ideas. They would allow only three names to go forward for the three vacancies, reflecting the time-honoured practices of totalitarian regimes around the world. The ballot papers were printed immediately.
It meant excluding candidates with strong co-operative movement credentials. Dame Pauline Green, the current president of the International Co-operative Alliance and former CEO of Co-operatives UK and Nick Eyre, a former City lawyer and secretary of the Co-opGroup before its fortunes nosedived, were deemed “unsuitable”.
This is jaw-dropping news to people in the co-operative sector. It totally ignores the rights of members to choose their representatives and it stinks of a mighty stitch-up against respected and popular people.
The board is bang to rights. As his first significant intervention, Mr Leighton should recognise the error and change this decision. There is still time for redemption, and a contested election of six candidates must take place. If the board can’t be ethical, then it should at least try and be co-operative.
- Peter Hunt is managing partner of Mutuo
