Comment: Melmoth the Warrior has excelled himself

With Andrew Regan and his team in full flight and the Co-op promising to pursue them to their graves, the time has perhaps come to ask how the young financier, backed by all those highly paid City advisers, could so horribly have misjudged this extraordinary smash-and-grab raid.

The first setback came when the plans leaked. Though newspapers and share traders thrive on such things, leaking scarcely ever works to the advantage of the bidder, for it gives the target time to muster its defences and prepare the ground against invaders. In this case the leak was near disastrous. The Regan assault was in effect a consortium bid. Even when things are going to plan, consortium bids are notoriously difficult to keep on the rails. It only requires one of the moving parts to break ranks, or get cold feet, and the whole thing falls apart.

But perhaps the Regan camp's most serious mistake was to underestimate the opposition. Graham Melmoth, chief executive of the CWS, has proved a feisty and highly effective fighter. If Mr Regan believed the CWS was such an enfeebled organisation that it would simply roll over and let its tummy be tickled, he could not have been more wrong. The Co-op has excelled itself with one of the most hard-hitting, irreverent and masterful defence campaigns in years. Using the press and the courts as its main battle weapons, the Co-op has managed to see off the bid before it was ever tabled.

Nor is Mr Melmoth prepared to back off now that he has won and allow the City to sweep the whole thing under the carpet. Virtually every financial regulator in the land from the Inland Revenue's special investigations unit to the DTI, from Imro to the Serious Fraud Office, and from the Securities and Futures Authority to the Stock Exchange, is being prevailed upon to investigate the matter and act. No wonder Nomura got cold feet. It's in enough trouble already back home in Japan without a British financial scandal to cope with as well.

Now that the balloon has gone up, we are being treated to an extraordinary and disreputable display of City advisers running for cover. According to the Co-op, almost no legal undertaking is too great for these people to sign if it means keeping these matters from coming to court. Never darken our doors again? Yes, yes, we'll sign that, no problem.

Mr Melmoth's sense of rage at the disloyalty and thievery of one of his own executives is one thing. But it is nothing against the anger he feels towards the City for its fee-hungry willingness to enter this sordid conspiracy, knowingly making use of stolen CWS material. He is right to push for the strongest possible action and retribution. This has been a shameful episode for the City, matching some of its darkest moments.

One good thing may have come out of it, however. The affair has blown away some dusty old cobwebs within the Co-operative movement, forcing it to re-examine its role and purpose in the modern world. Change is now inevitable. The only question is what shape it will take.