Watchdog defends approval of former Co-op chair Paul Flowers
James Moore is the Independent's Associate Business Editor and writes the Outlook City comment column from Tuesday to Friday. He also has a keen interest in disability issues and when not attempting to further injure himself playing wheelchair basketball.
Tuesday 07 January 2014
The man who approved the appointment of Paul Flowers as chairman of the Co-op told MPs he “stands by the decision”.
Clive Adamson, now director of supervision at the Financial Conduct Authority, said: "I’m as surprised as all of us at... Mr Flowers’ apparent misdemeanours.”
He later added: "It was a judgment I stand by. Do I regret what subsequently happened? Yes I do."
Last year Flowers was filmed allegedly buying drugs while it emerged that a laptop he used contained "inappropriate but not illegal" content. It came as the bank, which he had left, was reeling from a £2 billion hole in its accounts.
Defending himself before the Treasury Committee, Adamson said: “At no time did anyone in the firm, or in public life (who may have known about Mr Flowers’ behaviour), ever alert us.”
But he admitted that Flowers was approved after a meeting of just an hour and a half with Adamson and his colleagues. They unanimously waved through his appointment, as long as the bank hired two deputy chairmen with banking experience.
Both of those voted against the bungled attempt to buy 632 Lloyds branches, but the Co-op forged ahead.
An astonished committee chairman Andrew Tyrie said of Flowers: “It didn’t take us long to realise he was unsuitable.” But Adamson stuck to his guns: “I was surprised at the answers he gave. At the time (we met him) he was much more cogent. It was not the same individual I saw in 2010. He did appear to grasp the issues.”
Challenged on Flowers’ lack of banking experience, Adamson said his job was to “run the board not run the bank”. He added: “I did explore his experience together with why he was being put forward. At that time the reason that he was proposed and put forward was the board of the Co-op Bank was 22 individuals.
“It was a somewhat unruly board and it was important someone was put in place to better chair it.
“My view was that at the time Paul Flowers did have the competence to be non-executive chairman.”
Yesterday evening the watchdog announced an enforcement investigation into “decisions and events up to June 2013” when the Prudential Regulation Authority uncovered a £2 billion hole in the bank’s accounts. It is one of six probes either running or planned into the Co-op’s problems.
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