LORD Myners’ shocking revelations about the Co-operative Group confirmed our worst fears about poor stewardship, which led last week to the sudden resignation of its chief executive Euan Sutherland.
Myners’ verdict on the Co-op as a badly-run organisation guilty of “reckless” dealmaking and weak balance-sheet control was as scathing as anything said about the banks.
In comments made after his report was published early – largely as a result of Sutherland’s departure – he said it had wasted billions on deals that it should never have contemplated and found it being run by directors lacking in business experience, among them a plasterer, a lecturer, a nurse and a tax officer.
Myners was brought on to the Co-op’s board before Christmas as senior independent director to examine its governance. According to one account yesterday he rushed out his report a few weeks ahead of schedule after some board members refused to accept recommendations that may have stopped Sutherland from resigning.
Clearly, there have been some animated discussions, made more colourful by the no-holds barred language and finger-pointing. Myners did not hold back in accusing some of his fellow directors of amateurism, profligacy and rudeness.
Myners is no stranger to boardroom battles, nor is he immune from criticism. He lost his job on the NatWest board when Royal Bank of Scotland acquired it, and he chaired Marks & Spencer when Sir Philip Green was offering pieces of silver. As City minister in Gordon Brown’s Labour government he was at the centre of the bank bailout negotiations and his role in former RBS chief executive Fred Goodwin’s pension was the subject of a parliamentary inquiry.
But to say that he has lifted the lid on the Co-op is putting it mildly. He has prised it wide open and emptied a whole pile of mess on those who claimed the Co-op stood for ethical banking. This “holier than thou” attitude will no longer hold and will be a blow to those who continue to believe in the greater benefits of mutuality. It was a key plank in the Co-op’s disastrous and ultimately aborted attempt to buy the “Project Verde” assets from Lloyds.
Myners’ assessment of past failure is one thing; the real value in his report is his proposals for the future. He suggests a more conventional management structure, beginning with the abolition of its 21-member board and its replacement by one that is half the size, its directors drawn from commercial life. Put simply, he wants to professionalise an organisation that has been kidding itself. Even the head of its food business, Steve Murrells, has been quoted recently saying some of its supermarkets are “awful”.
There are bound to be assessments on whether the Co-op is, as Sutherland claimed, “ungovernable” and whether the proposals by Myners will be enough to put it right. He has warned that it is in danger of running out of money unless it restructures itself.
The fact that Myners was forced to publish his report early and his revelations of behind-the-scenes plotting against the now former chief executive suggest that the journey to recovery will be a long one.
Start-ups count has become a numbers game
IMPROVING Scotland’s business birthrate has been a vexed issue for years and the subject of much hand-wringing, though the question has moved on from how many start-ups are created to whether the analysis is reliable.
New research from the Committee of Scottish Bankers, formerly the Committee of Scottish Clearing Bankers (CSCB), has shown the number of new businesses created in the last quarter of 2013 fell by 9 per cent on the year before. Over the full year it was down 15 per cent.
Yet only a month earlier the Federation of Small Businesses reported that there had been a big increase in the number of people in Scotland starting their own business. The number registered with Companies House rose to 30,263 last year, a 19 per cent increase on the 2012 figure of 25,500. The Scottish Government claims that more than 340,000 businesses are operating in Scotland, a record high.
It is too simple an explanation to assume someone’s data is a bit dodgy. It is more to do with how the numbers are collated and the circumstances surrounding the wider economy.
The CSCB counts business accounts opened at Royal Bank of Scotland, Lloyds TSB Scotland, Bank of Scotland and Clydesdale Bank, though its membership now extends to Tesco Bank and HSBC, but other banks and even building societies are not counted. A more likely explanation for the fall, however, is that the economy has improved and those individuals who may have launched an enterprise of their own to pay the bills have found employment.
But that doesn’t explain the FSB’s research which points to more people signing up to the entrepreneurial culture in spite of more jobs being on offer.
This calls for more analysis.