FSA adviser dragged into Co-op scandal

The Co-Op scandal has suffered another crippling blow, after it emerged an FSA adviser who helped disgraced Chairman Paul Flowers land his job, was later employed as an executive director.

The long-standing Co-Op crisis has taken another embarrassing turn, as it was revealed that the FSA ‘expert’ employed to oversee senior baking appointments, later landed a role as a non-executive director at the Co-Op – just two years after approving the appointment of publically disgraced former Co-Op chairman, Paul Flowers.

Graeme Hardie was one of the Financial Services Authority’s experts on senior banking appointments – and was therefore brought in to help interview candidates for the Co-Op Chairman role.

However, a report from the Daily Mail has revealed that earlier this year - Hardie was recruited by the Co-op Bank as a non-executive director, a role that boasts a £30,000 to £50,000 salary for just a handful of days a year.

Paul Flowers was publically humiliated following a newspaper sting which appeared to show the former Chairman buying large quantities of illegal drugs.

Since then, a number of other reports from tabloid newspapers have implicated Flowers in more compromising situations, including sex scandals and numerous other drug-related offences.

Reports have also appeared to suggest that Flowers may have been instrumental in employing former FSA adviser, Graeme Hardie as a non-executive director.

The subsequent public outcry resulted in MPs last night lashing out at the former financial regulator for allowing Flowers to take the chair at the lender, with just four years of experience.

Treasury Committee Chairman Andrew Tyrie MP blasted the scheme, claiming it had ‘degenerated into little more than a bureaucratic box-ticking exercise’.

Following the interviews, it was revealed he FSA had expressed concern at the appointment of Flowers, and ordered the Co-op to recruit two deputy chairmen, Rodney Baker-Bates and David Davies to supervise to Flowers.


All three of which were on the Co-Op board when it was bidding for the Lloyds branch portfolio - Project Verde.

The crisis at the Co-operative Group continued earlier this week when Len Wardle, Chairman, resigned after admitting 'serious questions' were raised by the scandal involving former Chairman, Paul Flowers.

Mr Wardle, who held the position since 2007 said he will leave immediately, having led the board that appointed Mr Flowers.

Earlier in the month, Co-Op lost majority control of its banking division after failing to plug a £1.5 billion gap in its capital reserves – resulting in a buyout from two major US hedge funds.