LONDON - The chairman of the British food and financial services conglomerate Co-operative Group resigned Tuesday amid media reports that the former top executive of its banking business was purportedly caught on video buying illegal drugs.
Len Wardle, the group chairman, said in a statement Tuesday that recent allegations involving Paul Flowers, the former chairman of Co-operative Bank and a Methodist minister, have “raised a number of serious questions†for the bank and the group over all.
Mr. Wardle will be replaced by Ursula Lidbetter, who currently serves as deputy chairwoman of the group. She is expected to remain chairwoman through a governance review at the company.
This past weekend a British tabloid newspaper, The Mail on Sunday, reported that Mr. Flowers, 63, was covertly filmed counting out money to buy illegal drugs. The incident is said to have taken place just days after he appeared before Parliament this month to answer questions about his leadership at the bank. The report has since led to a police inquiry.
In a statement, Mr. Flowers, who left Co-op Bank in June, apologized for his “stupid and wrong†behavior and said he was seeking professional help. He has been suspended by the church.
“I led the board that appointed Paul Flowers to lead the bank board and under those circumstances I feel that it is right that I step down now, ahead of my planned retirement in May next year,†Mr. Wardle said in his statement.
“I have already made it clear that I believe the time is right for real change in our operations and our governance and the board recently started a detailed review of our democracy,†Mr. Wardle said. “I hope that the group now takes the chance to put in place a new democratic structure so we can modernize in the interests of all our members.â€
Co-operative Bank, in an effort to avoid collapse earlier this year, agreed to a debt restructuring in which it relinquished a 70 percent stake to a group of bondholders. Those included the hedge funds Silver Point Capital and Aurelius Capital Management, in exchange for a cash infusion of 125 million pounds, or $201 million. After the debt restructuring, the mutual company will be the bank’s largest shareholder, with a 30 percent stake.
The Co-operative Group traces its roots back to the Rochdale Pioneers Society, a cooperative company formed in 1844 that paid a share of its profit back to its members as a dividend.
The company provides a range of products and services, including operating grocery stores, funeral homes, pharmacies, an insurance company, a banking unit and legal services providers.
