Co-op Bank Chairman Paul Flowers Arrested
The Treasury is to reveal details of an inquiry into Co-op Bank as its former chairman is questioned by police.
22 November 2013
Paul Flowers held in drugs supply probe
Two weeks ago Paul Flowers was questioned about his banking qualifications by MPs investigating the problems at the Co-op Bank.
Paul Flowers grilled about Co-op job
Former Co-op bank chairman Paul Flowers has been arrested in connection with a drugs supply investigation, police have said.
West Yorkshire Police said officers detained the 63-year-old in the Merseyside area on Thursday night and he is being questioned at a police station in Leeds.
His arrest comes as the Treasury plans to announce details of an inquiry into Co-op Bank later, according to Sky Sources.
Mr Flowers, a Methodist minister, was suspended by both the church and the Labour party following drugs allegations.
Police outside Mr Flowers’ house in Bradford
It has also emerged that the Co-op is seeking to recover £31,000 paid to him since he quit his £132,000-a-year post in June.
In a statement, it said: “When Paul Flowers relinquished his responsibilities in June, it was agreed, as per his contractual obligations, that his fees for the rest of his period of office would be paid.
“Following recent revelations, the board stopped all payments with immediate effect and no further payments will be made.”
Mr Flowers, who led the Co-op Bank for three years, has been accused of incompetence after the bank found a £1.5bn black hole in its finances.
The Co-op is in trouble after a series of bad deals
This followed the purchase of Britannia Building Society in 2009 and abortive attempts to take on hundreds of Lloyds Bank branches.
The bank now faces a rescue which will see 50 branches close and investors including US hedge funds take control of 70% of the business.
The crisis at the Co-op was expected to be high on the agenda at a Prudential Regulation Authority board meeting at the Bank of England on Friday.
Conservative MP David Davis has said George Osborne and the Treasury had “serious questions to answer” about the oversight of the bank.
Mr Flowers has been described as “very believable, very plausible”
“There are really serious questions to answer about what they were all doing,” he told the Financial Times.
He said issues over the bank’s operations were raised by a rival at the time of the aborted takeover bid of Lloyds branches.
“These problems were apparent to a rival and would have been – with a bit of work – to anyone else,” Mr Davis said.
Labour – who have accused Prime Minister David Cameron of trying to “smear” them over their relationship with the Co-op – seized on the comments in a bid to turn the spotlight on to the Conservatives.
Labour has come under fire over its dealings with the Co-op
Leader Ed Miliband insists the party acted with the “utmost integrity” in their dealings with Mr Flowers and suspended him as soon as the allegations about his private life emerged.
Shadow chancellor Ed Balls, who received a £50,000 donation to his office from the Co-operative Group, said he had “nothing to hide”.
He told Sky News political editor Adam Boulton that he had never had a phone call or a meeting with Mr Flowers and stressed that the donation came from the Co-op Group and not the Co-op Bank.
Mr Cameron has announced an inquiry into the bank’s ailing finances and the decision to appoint Mr Flowers – with details expected to be announced within days.