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Co-op must reform or go bust - peer
2:15pm Sunday 13th April 2014 in © Press Association 2014
A former City minister who tried to reform the Co-operative Group has said only radical overhaul will save the loss-making chain of supermarkets, pharmacies and funeral homes.
Lord Myners resigned from the Co-op board last Wednesday as opposition mounted against his initial proposal to scrap the existing corporate structure.
He has warned that banks owed £1.2bn by the company will take a much tougher stance if no significant action is taken.
Richard Pennycook, the stand-in boss of the group, has said that the controversial reforms proposed by Lord Myners would still be taken seriously despite his resignation from the board.
The group, which has been rocked by disputes between warring factions over a proposed shake up, is expected to report losses of £2.5 billion on Thursday.
Former B&Q boss Euan Sutherland walked out as chief executive last month after claiming the embattled organisation was ''ungovernable''.
In article for The Guardian, Lord Myners said the group must take urgent steps to reform a ''massive failure'' of governance or it will go bust.
But he also admitted that his proposals are unlikely to prosper in the current climate.
Appointed in December following the drugs scandal surrounding the former Co-operative Bank chairman Paul Flowers, Lord Myners said: "I think the possibility of my proposals being accepted by the membership in May is quite low."
This week's announcement is expected to reflect a huge hole in the group's accounts, as well as write-downs on the value of the Co-op's acquisition of Somerfield in 2008.
The businessman also responded to critics who accused him of attempting to impose "Plc-style" reforms to the UK's biggest mutual.
Lord Myners claimed to be a "strong supporter of co-operatives and mutuality" but added that reforms were needed in the long term to save the group..
He said: "Otherwise the banks could conclude that they have to tighten their grip on the Co-op and the Government would probably accept that it would have to launch a full inquiry into the way the Co-op Group has been run over several years.
"I see these as being very real possibilities if the Co-Operative Group does not reform its governance and become more business-like while remaining true to co-operative values and principles."
Lord Myners was chairman of Guardian Media Group before becoming City minister in 2008 during the banking crisis.