Cameron threatens Labour with public inquiry into how drug addict Paul Flowers was put in charge of Co-op Bank
- Cameron claims Miliband is 'frightened' of an inquiry into bank
- Flowers attended a Downing Street reception hosted by Miliband and Balls
- Three meetings followed between Flowers and Mr Miliband
- Labour knew two years ago that Flowers had been forced to resign as one of the party’s city councillors after gay porn was found on his computer
A public inquiry could be launched into how disgraced Methodist preacher Paul Flowers ‘broke’ the Co-op Bank, David Cameron revealed today.
The Prime Minister claimed Ed Miliband is ‘frightened’ of what a probe could unearth about links between Rev Flowers and the Labour, which received millions from the troubled lender.
Mr Cameron said the Treasury is to hold talks with City watchdogs about launching an inquiry into why ‘alarm bells’ did not ring in the last Labour government about Rev Flowers unsuitability for the job.
Prime Minister David Cameron said Labour leader Ed Miliband was 'frightened' about what an inquiry into shamed Co-op Bank chief Rev Flowers would reveal
The Labour party faces serious questions about its links with Rev Flowers, who Mr Miliband appointed as a business adviser.
West Yorkshire Police have searched the home of Rev Flowers after he was filmed allegedly buying and using illegal drugs including crystal meth, crack cocaine and ketamine.
He was pictured at a lavish Downing Street reception hosted by Mr Miliband and Ed Balls while Labour was in power.
Three meetings followed between Rev Flowers and Mr Miliband, and weeks later the Co-op Bank approved more than £1 million in loans to Labour.
It also emerged yesterday that Labour knew two years ago that Rev Flowers had been forced to resign as one of the party’s city councillors after gay porn was found on his computer.
Hospitality: Paul Flowers (centre) at Downing Street for the launch of a Co-op venture in 2010
Labour support: Ed Miliband at the same function with Co-op chairman Len Wardle (left)
PMQS ON DRUGS: BALLS ASKS CAMERON IF THE TOOK COCAINE
Ed Balls repeatedly challenged David Cameron over his own drug-taking during furious Commons exchanges.
Labour's shadow chancellor bellowed at the Prime Minister: 'Have you taken cocaine? I haven't. Have you taken cocaine?'
Mr Cameron ignored him, but in 2005 he denied using cocaine while an MP.
The newly-elected Tory leader was asked on Chanel 4 News: 'If I asked you if you'd snorted cocaine as an MP, you'd therefore say No, wouldn't you?'
Mr Cameron replied: 'That's right.'
However he has refused to comment on his drug experiences before being elected to Parliament, insisting: 'What is private in the past should remain private.'
Drug-related insults dominated PMQs, in the wake of revelations about former Co-op Bank chief Rev Paul Flowers buying cocaine and crystal meth.
During an attack on Labour for spending the proceeds of its bank tax many times over, Mr Cameron joked: 'This isn't a policy, this is a night out with Reverend Flowers.'
And when Labour MP Michael Meacher (inset) claimed Britain is now 159th lowest in the world in terms of business investment, Mr Cameron replied: 'I can only conclude that you too have been on a night out of the town with Reverend Flowers and that mind-altering substances have taken effect.'
Mr Miliband has been scrambling to
distance himself from the disgraced Methodist minister since the Mail on
Sunday captured him on film buying hard drugs, including crack cocaine
and crystal meth.
Co-operative Group chairman Len Wardle has already quit amid the deepening scandal, which came after the ailing bank had to be bailed out by hedge funds after getting into financial difficulties.
Today Mr Cameron told the Commons that there were ‘a lot of questions that have to be answered’ about Rev Flowers’ appointment.
He revealed Chancellor George Osborne will hold talks with regulators about ‘what is the appropriate form of inquiry to get to the bottom of what went wrong here’.
And he ridiculed Mr Miliband for trying to hide from the scandal, after calling for inquiries into phone hacking, riots, breast implants, Jimmy Savile and care home abuse.
The Pm said: ‘We have finally found a public inquiry he doesn’t want. He comes to this House and asks for inquiry after inquiry into the culture and practices of this and that, but when it comes to the Co-op he is absolutely frightened of it.’
He said there are clearly a lot of questions that have to be answered: ‘Why was Rev Flowers judged suitable to be chairman of a bank? Why weren't alarm bells ringing earlier, particularly by those who knew?
‘I think it will be important in the coming days that if anyone does have information they stand up and provide it to the authorities.’
In a bizarre move, Mr Miliband tried to tackle the Prime Minister over Tory donors.
But it presented Mr Cameron with another opportunity to highlight Labour’s links with Rev Flowers.
The Prime Minister said: ‘How extraordinary that on today or all days he wants to talk about the people he associated with and takes money from.
‘Because what we can now see is that this bank, driven into the ball by this chairman, has been giving soft loans to the Labour party, facilities to the Labour party, donations to the Labour party, trooped in and out of Downing Street under Labour, still advising the Labour party.
‘And yet now we know all along that about his past. Why did they do nothing to bring to the attention of the authorities this man who has broken a bank?’
Mr Cameron repeatedly brought up the case, joking during an attack on the Opposition for spending the proceeds of its bank tax many times over: 'This isn't a policy, this is a night out with Reverend Flowers.'
A senior Labour source said that the Government had 'questions to answer' about reports of 30 meetings with the Co-Op at a time when it was being encouraged to take over Lloyds branches.
He described Mr Cameron's inquiry suggestion as 'a rather desperate political distraction'.
Asked whether Labour would back an inquiry, he replied: 'It depends what the inquiry is into.'
The Labour source added: I am not saying that there needs to be an inquiry. I am saying that there are questions to be answered.'
Co-op Group boss quits in growing row over ex-banking chief caught buying drugs
The Co-op was plunged into fresh chaos yesterday as its chairman fell on his sword for appointing crack addict Reverend Paul Flowers to head the group’s bank.
Len Wardle’s resignation came as anger is growing among ordinary investors whose retirement incomes are being raided to prop up the disaster-prone bank.
He admitted ‘serious questions’ were raised by the drugs scandal over former banking chairman Paul Flowers.
Mr Flowers, a former Labour councillor and Methodist minister who was chairman of the Co-operative Bank when it ran into trouble, faces an investigation by the police after being covertly filmed counting off £20 notes to buy hard drugs.
He was covertly filmed buying crystal meth and crack cocaine.
Resigned: Co-operative Group chairman Len
Wardle, left, has quit his job with immediate effect. Ursula Lidbetter,
right, replaces Mr Wardle in running the troubled Co-op Group
The Co-operative Group yesterday launched a fact-finding investigation into 'any inappropriate behaviour' at the group or the Co-operative Bank and a 'root-and-branch review' of the structure of the organisation.
There is growing incredulity that a man with no banking experience and a penchant for crystal meth and cocaine had been made chairman of a bank.
But today Mr Wardle announced he will quit the £145,000 position he has held since 2007.
He was due to leave next May but he said it was now right for him to go straight away, having led the board that appointed Mr Flowers.
Mr Wardle 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.
‘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. I led the board that appointed Paul Flowers to lead the bank board, and under those circumstances I feel that it is right that I step down now, ahead of my planned retirement in May next year'
- Len Wardle
‘I led the board that appointed Paul Flowers to lead the bank board and under those circumstances I feel that it is right that I step down now, ahead of my planned retirement in May next year.
‘I have already made it clear that I believe the time is right for real change in our operations and our governance and the board recently started a detailed review of our democracy.
‘I hope that the group now takes the chance to put in place a new democratic structure so we can modernise in the interests of all our members.’
Critics have questioned how he could have been appointed given his apparent lack of experience, and Andrew Tyrie, chairman of the Treasury Select Committee, said that, even before the weekend’s revelations, it was clear he was ‘manifestly unsuitable’.
The Co-operative Bank is facing a rescue plan which will see majority control turned over to investors including US hedge funds, after it was left with a £1.5 billion gap in its finances following the takeover of the Britannia Building Society in 2009.
Mr Wardle’s departure will see him replaced by his deputy, Ursula Lidbetter, chief executive of the Lincolnshire Co-operative.
The Co-operative Group said: ‘It is intended that Ursula will chair the group through the current governance review, which will include consideration of how the board is constituted and chaired.’
ED BALLS UNDER PRESSURE OVER £50,000 DONATION FROM CO-OP
Ed Balls has come under pressure to return a £50,000 donation backed by the former Co-operative Bank chairman hit by claims of hard drug use.
Labour's leadership has attempted to distance itself from Paul Flowers, a former councillor, after it emerged he attended a private meeting with Ed Miliband and both men were also present at two dinners in Westminster.
Sources insisted he was 'neither influential nor important'.
Yesterday the 63-year-old was suspended from the party for bringing it into disrepute following footage that appears to show him buying drugs days after being grilled by the Treasury Select Committee over the bank's disastrous performance.
A Labour source: 'It's true that there was a private meeting with Ed in March of this year. There were two informal dinners - three meetings that we can find records of in the space of three years.
Earlier this month Mr Flowers told the Commons Treasury committee said: 'My recollection is that we paid for a particular researcher to assist the shadow chancellor in the work that he needed to do, and that we believed to be a legitimate and proper use of resources.'
Tory MP Brooks Newmark told the Daily Telegraph: 'The Rev Flowers' judgment was clearly impaired if he was prepared to give Ed Balls £50,000.
'Mr Balls should now ask himself whether it is right to accept that money, and consider giving it back.'
MPs have castigated financial watchdogs for rubber-stamping the appointment of Rev Paul Flowers, which they denounced as a farcical ‘box-ticking exercise’.
Andrew Tyrie, chairman of the Commons Treasury Select Committee, said it was obvious when Flowers appeared before them earlier this month that he was ‘manifestly unsuitable’ to be a bank chairman.
He called for the regulation of senior bankers to be tightened to include continuing and ‘intrusive’ supervision.
‘It’s been a complete disaster. Nothing less than saying that will do,’ he told BBC Radio 4’s World At One.
He attacked the ‘approved persons regime’, whereby a City panel supposedly checked the competence of Rev Flowers, as ‘nothing more than a massive bureaucratic, back-covering, box-ticking exercise that satisfied regulators but did little or nothing to protect shareholders or customers of banks’.
In fact Flowers was only checked by the regulator when he became a member of the Co-op board and was not re-interviewed at all when he was promoted to chairman in April 2010.
Flowers quit his post in June this year as his ‘ethical’ bank was driven to the brink of collapse, threatening the retirement incomes of thousands of pensioners.
Yesterday he was also suspended by the Labour Party amid embarrassment over a £50,000 donation to Shadow Chancellor Ed Balls.
He faces a police inquiry into his use of hard drugs, and the Co-op announced a ‘root and branch review’ into ‘any inappropriate behaviour’ during the tenure of its former boss.
Mr Wardle will be replaced by his deputy, Ursula Lidbetter, chief executive of the Lincolnshire Co-operative.
She told BBC Radio 4's The World At One: 'The stories (about Mr Flowers) are shocking but it's not something that I can comment on today. There are investigations going on, it is in the hands of police.
'Len had already told the membership that he was going to stand down next May and in light of the review of governance, which Len started, he felt that making a fresh start with a new chairman would be the best way forward.
'We have to devise a governance for the Co-operative Group which is fit for the future, for the scale and complexity of the organisation. It's an amalgamation of many, many organisations over its 150-year history, and we realise that it needs to change, it needs to be simpler, and that will mean changing many things.
The one thing we do want to make sure is that members still have a voice at the heart of the Co-operative Group. There are seven million members and we think their voice should be heard loud and clear, but we are open-minded about how we achieve that.
'The review will look at absolutely everything - it will look at what went wrong, it will look at the opportunities and we will devise a governance structure that is fit for the future, involves our members and makes sure we are very efficient and highly effective in the future.'
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