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Co-op 'faces death of the co-operative business' if majority of directors become unelected

Former Labour MEP Michael McGowan urges shareholders to reject Lord Myners's 'fatally flawed' plans to end democracy

A leading activist said yesterday that the Co-op faces “the death of the business as a co-operative” if proposals for mainly unelected directors are taken forward.

Former Labour MEP Michael McGowan issued the warning to members before a meeting in Manchester on August 30 that will vote on the “professionalisation” plans. 

Proposals include slashing the number of elected board members to three and installing eight unelected directors. 

They are the result of a report by Lord Myners that criticised the Co-op’s structure and called for it to be run as a business. 

Co-op Group developed severe problems when Co-op Bank faced a £1.5 billion deficit, leading to its takeover by private equity investors.

But Mr McGowan, elected member of the Co-op Group for Leeds and Wakefield, said that Lord Myners’s ideas were “fundamentally flawed.”

“The crisis at the Co-op Group is not a failure of the co-operative model of business but a failure of both governance and of professional management,” he told the Star.

“The solution is not to ditch the business as a co-operative as proposed by Lord Myners.

“The Co-op Group is a co-operative business, not a plc, and needs directors who combine both competence and democratic credentials, besides professional managers who are competent and are held to account by the board of directors.

“Lord Myners also appears to be unaware of the success of co-operative businesses across the globe and throughout history besides the rapid growth of the many successful co-ops and mutuals across the UK.”

Co-operative movement veteran Mr McGowan said the group was facing its worst crisis in its 150 year history and that change was needed — but not abolition of co-operative status and control.

“A co-operative business is a democratic organisation controlled by its members, which is why it is different from a private business,” he said.

“So if the proposal to limit elected directors to three out of a board of 11 directors, the business will not be democratically controlled and will therefore not be a co-operative.”

The Co-operative did not wish to comment. 


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