Former Co-operative Bank chair Paul Flowers has spoken about the “considerable” pressure he was under to complete the failed takeover of a number of Lloyds Bank branches that almost wiped-out the co-operative-owned asset.
In an interview BBC Newsnight on Tuesday, he said he had been through a “hellish” few months and that the “present government” was keen for the Co-operative Bank to complete the acquisition of 632 Lloyds branches through Project Verde.
Newsnight presenter Jeremy Paxman asked how much pressure was the Co-operative Bank under over the Lloyds deal. Mr Flowers said: “Considerable; from the present government, mainly from the Conservatives. They wanted a deal and remember that the government was – still is – the major shareholder of that bank because of the structural support it had needed in 2008.
“Clearly they wanted a deal which would help them in terms of public finances. They actually said that they were keen on Co-op becoming a much more significant player with more scale.”
He added that there was pressure from Mark Hoban who was a junior minister in the Treasury and said he knows “that that originated much higher up with the chancellor himself”.
Part one of the interview: [youtube id=”PgJR_CaIJ9U”]
Last year, the Co-operative Group reduced its stake in the Bank from 100% to 30% due to the discovery of a capital hole of £1.5bn.
Paul Flowers, who left his position as chair and a director of the Co-operative Group in June, was arrested in November in connection with drugs offences following Mail on Sunday allegations, backed up by video footage, that he was purchasing illegal drugs in the days after an appearance at the Parliamentary Treasury Committee. He was also suspended from the Methodist Church, where he was a minister in Bradford.
He told Newsnight: “Many of the things which have come into the public domain actually occurred after I had left office. People assumed that they had occurred before, and they are quite wrong.”
He added that he has been enrolled in an addictions treatment programme at a London hospital for the four-weeks before Christmas, and checks in on a weekly basis. He commented: “For me personally there had been several months that have been hellish, but during that process I have actually been very well supported by a raft of friends. You certainly find out who your friends are, because a significant number of people in politics, in the Co-op and some in the church have been noticeable by their silence and their absence.
“I’m now much more secure in my own skin, much more self-aware, put that down to the treatment at the hospital and real support of really good people around me and I think I’ve changed because of that process.”
Part two of the interview: [youtube id=”yqiiDrzTJFQ”]
The November arrest also led to the Co-operative Group chair Len Wardle to resign from the Group for his role in appointing Mr Flowers to the Bank board. At the time, he said: “The recent revelations about the behaviour of Paul Flowers, the former chair of the Co-operative Bank, have raised a number of serious questions for both the Bank and the Group.”
Prior to this, Mr Flowers was interviewed by the Treasury select committee, which is investigating the collapse of the Co-operative Group’s Project Verde deal, which showed “his lack of knowledge of the Bank’s balance sheet and his failure to ensure that senior Bank staff reported promptly to the board regarding major developments.”
In January, Clive Adamson, director of supervision at the Financial Conduct Authority, said that he made the correct judgement in appointing Mr Flowers. Mr Adamson interviewed Mr Flowers in 2010 at the then regulator, the Financial Services Authority, and approved him as chair of the Bank’s board. He said: “I stand by the decision that I made at the time. I’m as surprised as all of us of the events surround Mr Flower’s apparent misdemeanours. I don’t think it was a mistake making the decision with the information I had at the time.”