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Good evening and welcome to the first live webinar from the Lord Myners review. My name
is Robert Cohen from the Group's internal communications team and I will be putting
your questions direct to Paul Myners. We have had plenty of questions already submitted
in advance, and we will try to get through as many of those as we can, but you can also
submit your questions live via the tab to the right hand side of the video screen and
I can tell that you have already started submitting those questions and we will do our very best
to get through as many of them as we possibly can.
In 2013, the co-operative group experienced the most difficult year of its 150 year history.
The financial crisis at the bank sparked an array of internal and external enquiries to
try and understand what went wrong at the co-op.
Last December, Lord Myners was appointed to the Group board as its first independent director,
given the task of carrying out a full governance review of our democratic structures starting
with the group board itself. Lord Myners welcome. You joined the group board at what must feel
like a critical moment in our history. I think it is a critical moment but I think
that we have lots of critical moments in the history of an organisation whether it is a
business or a charitable purpose of third sector, but the he harsh reality as we know,
Euan Sutherland has told us that our profit figures for 2012 which will be announced at
the end of March will be pretty ugly. To put it simply, over the last few years, the co-operative
group has managed to lose a major part of the capital surplus that has been accumulated
over 150 years. We are having to sell businesses because we can no longer afford to invest
in them or because we need the proceeds to pay down debt levels which are far too high
so I think thatís a Meester definition Robert of a critical time.
We have had several members including Jim King and others who have challenged your credentials
for taking on this task, what makes you think youíre so well qualified to do this?
Well the board decided that I was well qualified, and they decided I was well qualified I think
on the back of the fact that I have had experience in a number of business areas in which the
co-op is involved. I also have a lot of experience in governance. I did a report on the governance
of financial mutuals in 2004 for the treasury which was subsequent to the collapse of equitable
life. Why did equitable life collapse? Well Lord Justice Penrose, whoís carrying out
the equivalent of the Kelly Review of the Equitable, said that the problem at the Equitable
was self inflicted, the board failed, it wasnít up to the task and the governance was well
short of requirement. I have done governance reviews of not for profits, of charities,
of businesses. So, in the end the test will be is my report well argued? Is it credible?
Is it sensible? Does is work on the basis of observed fact? Does is challenge assertions
which are occasionally made without evidence to back them up? Well, I leave it to the members
to decide, Robert, by the Board, was clearly of the view that I was capable of doing this.
Well then, those are your credentials, Andrew Donkin has written in to say that how many
people in the Myners review team are elected members? How can you hope to understand the
co-operative model of business as complete outsiders?
Well, I have worked hard over the last 3 months to really understand the co-op, I have a lot
of familiarity with mutuality and co-operation. I am somebody who has worked in business for
many years, but I have always been of the left, I have always believed in the benefits
of co-operation. So, I have been familiarising myself, my team who are all part time have
been working hard meeting with lots of members, weíre interviewing the Board, we have got
a website where we are getting views, we are going to the meeting this Saturday in Manchester
for the regional boards, we are doing this webinar tonight. In the end, though Robert,
itís up to the members whether they think my report makes sense, I do not have any dictatorial
rights, nor would I want them. I am going to produce a set of recommendations, it will
be up to the members as to whether they think those recommendations make sense or not.
I am sure we will come back to how the members think of all of this later on. You mentioned
about the issues at the bank last year and how serious they were, where they just one
offís though? A number of people have commented to us in the run up to this webinar that we
are in danger of throwing the baby out with the bath water here. As Jane Davis has said
to us, Sir Christopher Kelly hasnít even reported yet and youíre jumping the gun in
doing this review? Well there are a couple of issues there, letís
take Kelly in a moment. Are we throwing the baby out with the bath water? The co-opís
debt levels are higher as a percentage of our economic value and our sales, than most
of the major retailers with whom we compete, for 50 years the co-op has been experiencing
a decline in market share in its key business, of groceries. Somerfield was acquired several
years ago in order to lift market share which is very important in the grocery segment.
Well four years later, having spent £1.8 million on Somerfield, our market share is
almost back to the level it was at before Somerfield. Britannia, which is not being
looked at by the Treasury Select Committee in detail, the Treasury Select Committee is
looking at project Verde, Britannia was an outrageous disruption of value, and I mean
quite lamentable failure of due diligence and proper process by the group. Pharmacies,
good business but we have been losing market share there as well, we have not been investing,
so I am not sure that I would accept that everything is fine and dandy with the exception
of the Bank that simply isnít the case. The most pressing issue, Robert is the debt levels
which the Bank has had to incur in order to buy Somerfield, to buy Britannia and the huge
costs in Verde. Hundreds of millions of pounds wasted on IT has now meant that we are forced
sellers of assets. Do the Group want the Board to recognise that
they are responsible for a near catastrophic failure of governance last year?
I think you would have to ask that question, Robert, to Board members individually. What
I see is a board of directors that has struggled to understand some of the big issues that
are facing the co-op. A board of directors that has not developed the right skills to
challenge constructively the executive management team, it is for the members to decide to what
extent the Board was at fault, but I can tell you from my experience of business and I was
brought in by the Government to handle the negotiations on the failure of RBS and HBOS
and putting the taxpayers money into those companies and Bradford and Bingley and Northern
Rock so itís really every case, Robert, the issue was one of a poor board of Directors.
I have never seen a case where an organisation has experienced losses of this scale without
having to conclude that the board has some very big questions to answer.
Ok, so you have made it clear that governance is very central to The Co-operative Groupís
future. Andrew Harrison has written to you to ask you to explain exactly, how are you
conducting this review? Who are you talking with? Who are you listening to?
Andrew, I am trying to listen to as many people as possible, so we have a website to which
people can respond, I have a small team, I am not running a large overhead here, I am
not getting carried away with cost. Weíve structured the review in two phases: Phase
1 as you said in your introduction to look at issues around the board and the functioning
of the board; Phase 2 is to look at the broader issues of democracy and connectivity between
the Co-operative Group and its members. And I expect that we are going to spend much more
time on broader consultation on phase 2 because thatís about getting out and talking to area
committee members, members, regional directors. My focus initially has been on how has the
board of directors worked? And there, clearly the important thing to do is to talk with
the existing directors and those who have recently been on the board.
You have been quoted as saying that there are no no go areas, everything is open for
discussion. Is the whole system really bust? I think if you went to your doctor and said
I want to have a complete medical and your doctor subsequently said: well, I have checked
everything, except I donít look at feet, and I didnít look at your knees and I have
not looked at your heart, you might say that that is not really a proper medical so I am
looking at everything but that doesnít pre-suppose that there are issues everywhere, in fact
I think it is increasingly clear where the issues do lie. They lie in the interface as
far as phase 1 is concerned between the board of directors and the executive team of the
co-operative group. Kathryn Smith would like to know whether the
review includes looking at the role of the remuneration committee and its relationship
to senior management, clearly concerns there about how we review salaryís and pay offs.
Yes it does look at the structure of governance beneath the board so we have in business senses,
we have a food board and the special business board and we have got the values and principles
board and we have got the remuneration committee and the audit committee and I am looking at
the functioning of all of those. I think it will be fair to say that I have found shortcomings
in all those areas and issues that need to be addressed and can be addressed to get us
up to best standard practise. We know for instance that the financial regulator is now
asking questions about the accuracy of our accounts, this is a serious issue that raises
questions about the audit committee of both the bank and of the group board and of the
board of the bank and of the group who signed these accounts. And these Robert, I just want
to emphasise to co-operators and colleagues who may be listening to this Webinar, these
are quite serious issues. There was a time in the late summer of last year when The Co-operative
group came very seriously close to the administrators being appointed. Our assets would have been
sold; our grocery stores would have been probably bid for by one of the big grocers who want
to get into convenience stores. Pharmacies would have been acquired by private equity,
funerals as well. The Co-op Group came very close to failing and I think that everybody
listening to this is entitled to know that. This is not a scare story, we are back in
a safer place, in part because we recapitalised the bank with less money than we originally
envisaged but we now have very limited influence over the bank, we only own 30%. We have had
to sell our wonderful headquarters building in Manchester, we didnít intent to sell that
building but we had to sell it and that is now taking on a debt because we have to pay
rent on that building whereas previously we owned it. We are having to do things to make
up for the incredibly poor leadership of the Group over recent years.
Linda McDermot would like to know where else you are looking in the UK or abroad to inform
your thinking about what good co-operative practice should look like?
Linda, I think that is a wonderful question and we have done a lot there including with
Co-operatives UK. We have been looking at areas where co-operatives are successful and
where co-operatives have not been successful. There are examples in food retailing including
Sweden and Switzerland where the co-operative movement has been very successful. We are
asking why has that been the case and why in other countries, the co-operative movement
has not been able to maintain a serious, viable position in food retailing. There have been
a lot of failures of grocery retailers globally. There have been failures of commercially owned
retailers. I just want to make clear as well, I donít believe PLC good, co-op bad; family
ownership good, private equity bad. Believe me, businesses can be run highly functionally
regardless of the form of ownership and I do not believe that being a co-operative is
in any way a disadvantage, in fact, Iím very convinced that being a co-op and standing
for our values and our principles and our ethics and working colleagically with our
staff should be a source of very very substantial strength.
From what you have been observing around the country, what have you seen in terms of about
what our general culture looks like? What are you observing about our ways of working?
Not only in governance but at all levels? Thatís a very difficult question, it is a
good question but it is a difficult question. It is very easy to think about governance
in architectural terms, you create charts with little boxes and lines coming down, behaviour
is about the way people engage with each other. I think there has been a lot of tension between
management and the board at the co-op for a number of years. Far less so now than I
understand has been the case for probably coming on for a decade. There is a climate
of distrust which is not helpful, I canít speak to how that filters down into the organisation
but I sense that there is some tension between the regional boards and the national board.
It is quite difficult for the elected directors on the co-operative group board to go back
to their ëconstituenciesí and tell them the bad news and explain their role in that
bad news and I think that goes on down to the area committees as well so, I think that
one of the things which we need to try and achieve here Robert is greater transparency
and openness, and better relationships. Just, going on from those points, Richard
Carpenter wants to know whether you that area committeeís accurately reflect the views
of the local customers? Richard that is a phase 2 question. I have
done phase 1 incidentally before phase 2 because numerically, 1 comes before 2 but also because
I believe that the problems facing the board were, really required quite early and immediate
reaction so phase 2 which I hope to complete between the beginning of May and the beginning
of December will give me a lot of chance to go out, attend area committee meetings, I
would like to attend a lot of them, I set myself a goal of going to at least 1 in 3
of all area committees and I want to go to the regional boards, I want to spend more
time with the regional societies. But that is phase 2, and phase 1 has got to be about
what was happening in the board room and immediately around the board room.
Liz Jamieson wants to know how your review fits with the Have Your Say Campaign? Who
is going to win out? Is it going to be you or the British public?
Well, I wouldnít like to put myself up against the great British public. I think there are
two completely different issues here, there are an awful lot of views going on in the
co-op and that again, if you had a list of organisations that exhibit good governance,
are largely characterised by a,b,c,d. And organisations which have had inadequate governance
are identified as having x,y,d well having half a dozen regulatory reports on you I think
is on the side of bad governance. All the alphabets we have here, we have the PRA, the
FCA, the FRC, the TSC and the Kelly review in addition to Have Your Say (HYS) and my
review of governance. I think that Have Your Say is an initiative where the management
and the board are trying to engage with the membership and find out what the members perception
of what the co-op group is and what they expect from the co-op group. I am much more; Iím
tinkering away with the pipework of how the governance works.
There has been a lot of concern, quite a few people have said this to us over the past
week is that Have Your Say is effectively going over the heads of the elected democrats
to create a consensus for radical reform. I donít think there are really any questions
in Have Your Say which are linked to my work. I wasnít involved in designing have your
say so I donít think thatís the case, I think Politicians often donít like opinion
polls because the public doesnít always agree with what they have been doing. I think it
is commendable that the board, who supported Have Your Say although they werenít involved
in writing every question that is quite a professional job which was done by YouGov.
But I think the board is right to say to members what do you value? What do you associate with
the co-op? What does the co-op mean to you? So I think that it is good work, Robert but
it is not really related to what I am doing. Ok, we have started having questions being
sent into us live so thatís fantastic, thank you very much, keep sending them through,
let me give you one of those now. So, Ian Hanson has written in to ask us, why are area
committeeís only now learning about the dire financial picture that you were describing
a few moments ago? Well, I think, Ian, the area committees would
have been aware of the large losses reported for the first half of 2013, the area committees
were clearly aware of the large amount of money which had to be invested into the bank
which was about protecting our, our brand really, protecting our values. It is going
to be a long, long time before we begin to see a good return on our investment in the
bank, a long time. So the area committees were aware of that, but I think one of the
issues that I would be saying to the area committees is, how do you define your relationship
with the structure above you? How does this information move up and down the organisation?
Do we listen enough to the views coming from the bottom? Do they get up enough in an unintermediated
way? In a digital economy with wonderful facilities like the ones we are using this evening, it
is possible to engage with the membership, it would be possible for instance, I am not
saying this would be a recommendation, but it would be possible for Ursula Lidbetter,
the chair and Euan Sutherland, each month to do a webcast to the membership, updating
on issues of importance. There are ways in which we can connect with the membership which
simply werenít possible ten or fifteen years ago. Even writing to members fifteen years
ago would have been prohibitively expensive on a regular basis, but, we are not sure how
many members we have. We say 8 million but we are not sure that records are accurate.
We canít even be confident that all the votes are accurate and we donít have e-mail addresses
for a large proportion of our members who we know have e-mail so there is a lot to be
done here Robert but some very exciting ways to connect in the future if we want.
Ok, we are being very high tech tonight so letís take another live question from Vivian
Woodell who is asking, how can we be even more radical than in the past via this review
process? Well I, I have always regarded the co-op as
a radical organisation, a campaigning organisation, an organisation that isnít content with the
status quo, an organisation that stands up for the little people. We donít have large
financial institutions owning the co-operative group, we are owned by our members and that
should make us disposed towards being radical, but I am not sure that I can see a whole lot
that we have done in recent years Vivian, which is hugely radical. And even when we
have been radical on things like Fairtrade, others have caught up with us; we are not
distinctly clear on Fairtrade, compared with some of our competitors. On value, our value
proposition is lamentably short of where it should be in terms of our pricing of our products
in the stores so I think there is an awful lot that we can do that will be radical both
in our core activity and in terms of other things like re-engaging the communities which
is a big theme the board has been discussing now for the last four months, how does the
co-op become relevant to communities? Ok, letís stick with the Group board for
the moment, a question has come in form Louisa Brown Morgan, Louisa is asking, the current
Group board all sat on the fence, they never spoke up, should they all stand down?
Well itís up to the Group board as and when they either come up for re-election to decide
whether to offer themselves for election, it will be open for a director to say, do
you know, I recognise that I must accept some of the responsibility for what has gone wrong,
I canít look people in the face and say that I didnít in some way fall short of what I
should have done and in those circumstances, a director could stand down, but it is not
for me to say that and the ultimate decision rests with the individual director, do they
regard themselves as in any way to be a contributory factor the truly horrific financial situation
that we find ourselves in and if they donít, or they think that they have good defences
then they should articulate that defences to their electorate and allow the electorate
to decide. Ok, so just to let you know, you are getting
some fan mail that is already coming in here, Darren Harrop has written to say, Lord Myners
is talking openly and honestly about The Co-operative Group and he needs to be praised.
Ah, well, thank you very much Darren, the cheque is in the post!
Ok, Darren Crowe wrote in earlier and asked, how can Group Board members genuinely set
strategy and provide leadership rather than just rubber stamp the decisions taken by the
management executive? Well thatís, were getting very good questions
here, very good questions, much better questions that I have been asked at some of my other
engagements within the Group. Who determines strategy? Is it determined by the Board or
by the management? Well, I think strategy is about purpose and itís about objectives,
how you define success. So, clearly for us, success is defined very differently from ASDA
or ALDI or LIDL because success is not just about maximising profitability, far from it,
it is about achieving an adequate surplus so that we can maintain the value of our business,
so that we can invest in the estate, and may I add that in my view there has been sustained
underinvestment in our businesses portfolio, in our stores, in our people, there has been
a lot of investment in IT which is worth, about next to nothing but this is a story
of underinvestment and that is reflected in our declining market share. But Robert, if
we donít get the business to perform then we canít do the thing which I think really
matters to our members is what we do with the surplus that is not required in the business?
And the painful truth, I am quite happy to say that the painful truth is that we have
precious little that we can at the moment devote to the things that we would really
love to devote money to until we fix the balance sheet. If we donít fix the balance sheet,
and Iím not going to go into technical terminology here but I may well put something on our website
at some point about trying to explain what I mean about the stress to our balance sheet.
In fact, I will make a commitment to do that, to explain the technical terms on why I and
others are asserting that the balance sheet needs to be repaired. Unless we do that, Robert
then all our wonderful ideas about being an employer of choice, incidentally, did you
know that we have a higher employee turnover than most of our major competitors? There
is a cognitive dissonance, there are often assertions made to me about how we are price
competitive, we are better at Fairtrade, our employees stay with us longer. So I say, well
just show me the facts, letís find the facts so we need to sort those things out.
We have had quite a few people writing into us in the last few days expressing a great
deal of concern and this is within the existing elected membership that this review that you
are undertaking will result in powers and responsibilities being taken away from elected
members and given to appointed outsiders like yourself, or to senior management, those are
legitimate concerns arenít they? I can assure everybody that power, ultimate
power, will continue to rest where is should do, with the members. The members will have
the ultimate decision both on the implementation of my review and on everything that an owner
of a business has, whether it is a PLC or a co-operative or a mutual. But I believe
that our members also want the Group to be much better managed in the future than it
has been in the past because itís only if itís better managed, and I think that requires
us to be much more open, and we are not as restricted as a public company, a public company
cannot say very much Robert because it is listed and itís got to disclose things at
certain dates and whether that makes people insiders. We have behaved a bit like that
whereas we can be open as I am trying to be this evening, but at the core of the co-op
has got to be member determination, it is a member owned organisation and it always
will be a member owned organisation, unless the current financial crisis continues and
we end up being owned by the banks and I think people need to understand that. Robert, I
pull no wool over anybodyís eyes, I really pull no wool over anybodyís eyes and say
that last year the Group got quite close to a situation where the banks would have effectively
taken control of the decision making and possibly the Groupís assets.
Doesnít that tell you though that we must need more full time professionals on the Group
Board? It tells me that we need a different skills
set around the board table, it tells me that we need more clarity amongst our directors
about what their role is, there has been a tendency to miss the big picture and to focus
on small issues, and I have sat on the boards of many organisations and this board falls
in the bottom quartile in terms of effectiveness of any board that I have either sat on or
witnessed. Letís take another question that has come
in live in the past couple of minutes, this is from Shaun Fenson. Shaun is asking, where
is the boundary between the exec and members? Shaun, that is a really good question, there
are boundary issues between the exec and the board. The role of the board is to set the
goals, define the purpose, articulate what success means, to set a framework for which
management will then bring forward strategic proposals. Ideally management doesnít bring
forward one strategy; it brings forward a range of strategic options with a clearly
stated preference for one. The board then challenges that and satisfies itself in terms
of agreeing a route forward. So thatís one boundary and then youíve got to make sure
that the boundary between the board and the membership and the boundary between the executive
and the membership and I think that the executive need and indeed the current executive. There
has been quite a lot of bad news in what I have been saying, hopefully straight talking
but the executive team is pretty good, itís a lot better than the executive team that
the Group has had in recent years and we are really very fortunate to have that team and
I think that that team does want to speak more to the membership, Have your Say is part
of that, the idea I floated earlier on about a monthly intranet call is part of that. So
that is a contact between the executive and the membership and there is another element
which is the contact between the board and the membership. Now that at the moment involves
the regional boards and the area committees and I think in the second phase of my work,
I am going to be looking at, is that the right form of, have we got the boundary in the right
place and are there new ways of communicating which means we can open up for more accountability?
But I donít really have a strong sense to what extent the current elected members of
the board are held to account by their regional boards and by their area committees.
Letís take a question that has come in from Nick Fletcher. Nick is asking, how would Lord
Myners like to see employees represented in any new democratic structure?
I donít have the answer to that yet, but I will make a recommendation, my terms of
reference which were set by the board did ask me to look at this. We have 100,000 people
working for us, Robert, and they probably have at least two dependents each and we have
nearly a quarter of a million people whose lives are critically dependent on the Co-op,
they largely work in our stores and in our service centres, our farms, our pharmacies
and funeral homes etc, they are in contact with our members and our customers and they
are a great source of insight and I think we need to find a way of tapping into that.
Can you foresee a scenario where we become some kind of hybrid or a consumer co-operative
and a worker co-operative like John Lewis? Well, itís interesting that you raise John
Lewis, it is a different model, it is a successful mutual and it gets its strength from employee
ownership. I can certainly see a lot of advantage in us being more open to our employees in
terms of them being involved as a sounding board and as part of our democracy. I find
it easier to argue the case for more involvement rather than less involvement as at the moment
it is almost zero. I think we can find a way there of blending but for the avoidance of
doubt and this goes back to an earlier answer, I have no contemplation in which the co-operative
group ceases to be owned by its members. Ok, Ian Bryan has just sent in this to us
ñ criminal prosecutions for failure from the old exec and the group board?
Iím not a lawyer, Ian, I joined the treasury, the government two weeks after the collapse
of Lehman brothers, ten days before the collapse of the Royal Bank of Scotland and Lloyds so
I have had plenty of insight into badly managed businesses I am afraid. I lament the fact
that there have been no criminal prosecutions but I donít think that the law provides many
opportunities here, Ian, and I am not a lawyer and I canít possibly be drawn into expressing
a view on that other than I understand your question
Why doesnít the co-operative group through its existing democracy pull through the kind
of people that are needed to govern a multi billion pound operation?
I think itís a challenge, I think it really is a challenge, the criteria by which people
are elected to the Group board are quite complex, individual decisions, itís not like picking
a team, itís as though you have a football team which has eleven managers, each of whom
picks one player without even discussing with each other whether one is picking the goal
keeper and the other is picking the centre forward, you just hope that you get a balanced
team and its only when you go on the pitch that you realise that you have got nine goal
keepers. Weíve got training processes, which, the quality of training is so poor, the standards
that are set do not constitute any meaningful method of screening out inadequate candidates,
quite frankly they are not tests that should be of any great difficulty to somebody who
is determined enough to want to pass them. To that point, let me read you a question
that was sent in a couple of days ago from Michael Smith: ëI have been an elected area
committee member for four years and Paul Flowers sat on the same committee until his sudden
resignation, Paul was extremely self assured and plausible, do you believe that your root
and branch review of governance, a generally much misunderstood concept, will potentially
flush out other potential major flaws in our elected democratic structure?í
I have never met the Reverend Paul Flowers, I have been told by people who sat around
the board table that he was more effective than the average. So, I am not going to be
drawn into talking about that, I think it is probably unwise for me to do that. What
I would like to do is to come up with a solution in which the Co-operative Group moves to restore
and regain and increase market share in its chosen markets with a safe financing strategy,
with the ability to re-invest in our people and our portfolio and importantly generating
a strong enough surplus to re-invest in good causes. Goodness me, that is even more necessary
now, when this Government is cutting back on welfare, cutting back on social services,
cutting back on community expenditure, itís very depressing that when we should be able
to step in and at least represent counterbalance, we find ourselves that because of failed leadership,
poor decision making, to not be able to be there at the moment of greatest need.
James Bell has just sent us a message, in broad terms, says James, what are the radical
options for changing governance whilst preserving democratic control?
James, in my review, I will set out what I see as those options. I will set out what
I see as the criteria that a rational person might agree would be the ones that one would
use in selecting between different structures, but I think that it would be imprudent and
unwise for me to go further because, James, is actually asking me to share with him something
that I have not yet reached a conclusion on. Ok.
But can I rest assure that I will be publishing my report to the full membership, my report
is not being filtered through the board of directors, it is going to the membership,
it is going to the people who own the society. Ok, question from Michael Shepherd. Do you
think there was a case for believing that because we didnít have a vision, we have
ended up being a follower rather than a leader, reacting to circumstances, and in addition
to this, has this led to an unwillingness to innovate and adjust to current fast changing
circumstances? Well, thatís almost a question that you could
have a whole board meeting where you just have that statement put up on the screen and
say ëdiscussí. Yes we are operating in fast changing environments, yes, we have in the
past innovated, we talk a lot about the past, we talk about being the first self service
store, but our innovation in recent years has not been particularly outstanding so I
think a characterisation of a successful organisation is one that responds to changing environment,
anticipates well and positions itself appropriately though innovation and flair, an organisation
defined by strong values. The core of the question was did we have a vision? I think
everybody had visions, the fact is that there were lots of visions but I am not entirely
sure that was one single vision and if you donít know where you are going, you shouldnít
be very surprised when you donít know where you but arrived. But, for instance, if Verde
had gone though, the co-op would have become a bank with other businesses attached to it.
The risk profile of the Group would have changed dramatically; banks operate on a sliver of
capital. Small errors can occasionally have very dramatic consequences. Did the Group
really understand that? Did the Board really say ëwe want to up the risk profile of the
Group to a point where our existing businesses become secondary rather than primary?í And
what was the basis for doing that? Because it is not clear to me that banking is a sector
which is underserved, its underserved by organisations that donít take much care of their customers,
and who donít have defined ethics, but, again the cognitive dissonance here would be that
you might have assumed that things like the mis-selling on Personal Payment Insurance
(PPI) and the mis-selling of loans to small businesses, ah, well the co-op, thatís an
ethical bank, the co-op will have very little experience of having to compensate customers
for that sort of activity. Well, I am afraid, Robert, that our experience was not markedly
different from other banks, so even where we claimed we were different, where we really
that different? So, itís not for me to say what the vision is, itís for the Board of
directors who are largely elected by the people listening to this broadcast, but I hope that
I might set up a framework in which good, clear goals can be set.
Ok, letís bring this right up to date. Today, we had the leaked news that the Group is planning
to sell its farms business and possible its pharmacies too. This was a leak that we understand
came from within our democracy, what does that say to you?
I am not sure that I could agree that it came from within our democracy. What I can say
is, the leak clearly came from an insider because, there may be people who knew one
part of the leak or another part, but the number of people that knew about the whole
leak, farms, pharmacy, likely loss, likely reductions in headcount, people out of employment.
It is quite a small number than knew all that and we pretty much know who they are and I
have said to Euan, ëlook mate, what I would do is put a lot of effort into finding out
who this isí and I have said the same to my colleagues on the board because, this is
corrosive behaviour, somebody out there Robert, chose to leak this information and what have
they done? They have frustrated a carefully planned programme of letting our colleagues
in those businesses know what we were doing, and why. They have again, put us in a situation
where we appear to be chaotic. They have tried to drive a wedge between the board and the
membership, I canít understand, Robert why anybody would do this and itís not the first
time, we had a series of leaks in the summer of last year, they did us a lot of damage
and a lot of damage has been done again today. Finally, because I am afraid we are running
out of time. Iím not, Iím going to say we are not running
out of time, but if there are more questions Robert, I will carry on and if there is an
appetite for doing another of these sessions then I will do it as well because I want to
have a chance of stimulating people to get back, go to my website and tell me what you
thought, tell me, have I stimulated any thoughts in your mind or has it been a complete load
of bunkum then tell me, and if you think no you should start thinking about this, or donít
rule that out of have you thought about this. I want to hear that Robert.
Ok, well let me put one final point to you Paul, the Co-op has a very long history of
ignoring the recommendations from reviews that it sets up itself so how are you going
to ensure that you manage to bring the membership with you to land the recommendations that
you are going to want make? I donít have the power to do that, but you
are absolutely right, the Gaitskell commission, the Harvey review, the Blair/ Monks review
and others and indeed at one stage, I thought that I could write my review just by taking
sentences out of all the other reviews and putting them together and there wouldnít
be a single new word in there. Again, the consistent theme in all of those reviews was
being run in a commercially efficient way in order to be able to treat our colleagues
well, to give our members their rewards through dividend and to do business in a co-operative
way so itís all been done before and the people who will decide whether this review
is sensible and should be adopted are the people who are listening to this now, it will
be the membership. It will be for the membership to say whether they want change, I believe
if we donít change, then there is a certain inevitability about how this will all end
and therefore I think the luxury of just say, ëoh, it was just the bank, everything is
alright now, nothing to worry about, no need to do anything differentí I can only see
that ending in a rather sad way for an organisation that has its origins with the Rochdale Pioneers.
The Rochdale Pioneers would not fail to take action now.
Paul Myners, for the moment, for tonight, thank you very much indeed. We are going to
have to stop there, thank you very much for sending in all your questions, we have tried
to get through as many of them as we can, we will going to try and answer any that we
havenít managed to answer tonight, we will get back to you. The first phase of Paulís
recommendations will come out towards the end of April but thank you very much for watching
this evening and good night.