The former City minister Lord Myners has launched a devastating assault on the Co-op calling for sweeping change at what he called a "dysfunctional" institution with "deplorable" governance.
It came on the day that Paul Flowers, the former chairman of the Co-operative Bank, mockingly dubbed the "crystal methodist", admitted possessing drugs at a Leeds Court.
The discovery of a £1.5bn hole in the bank's balance sheet plunged the entire group into a crisis by which it continues to be gripped.
While the reforms proposed at the stage of Lord Myners's interim report – hurried out earlier this year – were little changed in his 180-page final document, he eviscerated his boardroom colleagues with a withering display of public contempt just 10 days before the beleaguered institution's crucial annual meeting in Manchester. As things stand it is due to be behind closed-doors – a fact criticised by Lord Myners. But Co-operative sources indicated that there could be movement on that front in the coming days.
In his review the peer blasted what he saw as a "culture of entitlement" which exists among a "small but highly active" proportion of the Co-op's 8 million-strong membership. And he accused them of "hiding behind values" to "stifle criticism and protect self interest".
Lord Myners, who is stepping down as the Co-op's senior independent director, said it was telling that "no director has yet felt obliged to speak up for their own contribution to failure". He also accused the regional boards that supply most of the main board's directors of being "stuck in denial" over a "ruinous failure of governance" and attacked a "manifestly dysfunctional" main board.
Lord Myners insisted that the struggling and debt-ridden business could still be reformed and turned around. But he said it would require directors accepting the need to follow the "road map" he has set out. That would involve the appointment of a new board made up of a majority of independent directors with "business experience". They would be supervised by a national council, appointed from the Co-op's membership on the basis of one member, one vote.
Lord Myners claimed that this arrangement would not involve Co-op becoming something broadly similar to a plc, albeit with a couple of tweaks. He pointed to his proposals for providing employee representation on the society's remuneration committee as a model at odds with those operated by public companies. Many would in fact be aghast at the very idea.
"There is nothing in this report that is anti Co-operative or anti-mutual. This is a very troubled institute that needs fundamental fixing," Lord Myners said.
"This is a group that is potentially at an inflexion point after 50 years of almost remorseless decline in terms of scale and presence.
"Many people, particularly those who feel strongly, will find this very attractive."
But not Andrew Love, a Labour MP on the Treasury Committee who was involved in several testy exchanges with the former City minister when he appeared before MPs to discuss his review.
Mr Love said it failed to "recognise the Co-op's distinctiveness". He pointed to an editorial in the Financial Times to that effect written following the interim report's release.
Lord Myners hit back, saying that the FT would not have seen his full report.
"This group has managed to lose in the last four years half the capital it accumulated over 150 years. This was a board that included Paul Flowers, part of the NEC of the Co-operative party. Is this the economic model you are advocating?
"I want cabal insiders to make a selfless sacrifice and give up their fees. If there is no change the Co-op will continue its decline."
At the same hearing Lord Myners urged MPs to contact the Co-op about the possible publication of a report by corporate investigator Kroll into boardroom leaks, which included details of former chief executive Euan Sutherland's generous salary package. It led to his resignation.
Lord Myners, who described his departure as "catastrophic", also repeatedly questioned whether the institution's bankers would continue to lend to it under the current structure.
One source, close to the syndicate, however, said they might be reluctant to "do Lord Myners's job for him" although banks would not make a public comment about a customer.
The Co-operative's chairman, Ursula Lidbetter, said that the institution "welcomes the report".
"The board of the group has made clear its commitment to far-reaching and fundamental reform of our governance.
"A resolution containing four key principles on reform is being put to members at a general meeting in May and we will build from there to ensure we put the right changes in place. Paul's report will be an invaluable contribution to that report."