Former Co-op Bank chair Paul Flowers investigated for expenses claims and suspended from drug charity

Ed Miliband defends Labour's dealing with bank and Mr Flowers, saying party acted with 'utmost integrity'

The disgraced former Co-op Bank chairman Paul Flowers was suspended by the drugs charity where he was a trustee following an investigation into his expenses claims.

The Methodist minister raised “concerns” at the Lifeline Project and was temporarily removed from the board - but left altogether in 2004, long before the recent scandal over alleged drug use and accusations of incompetence.

Ed Miliband has been forced to defend his party's dealings with the Co-op and Mr Flowers, after Prime Minister David Cameron launched what the Labour leader has branded a “smear campaign” surrounding links between the two.

The Chancellor George Osborne is set to lead an inquiry into the bank's financial situation and the decision to appoint the 53-year-old as its chief - and the chairman of the Co-op group Len Wardle has already resigned over the actions taken by his board.

Speaking today to Sky News, the chief executive of the Lifeline Project in Manchester Ian Wardle said: “I developed concerns at the beginning of 2004 about some of the claims that had been made and I spoke with our treasurer at the time and we then involved our solicitors and, to cut a long story short, in June 2004 I raised the matter formally, fully and in depth with our trustees body.

“Our trustees body suspended Rev Flowers and then we began to investigate the claims.

“And we investigated five years of claims.

“We looked at these claims, then we invited Rev Flowers to reply to us in order that he could tell us what the rationale behind these claims were.”

Mr Wardle said Mr Flowers' response was “not a lot” and he complied with the investigation “begrudgingly”.

“We didn't feel as a committee, because there was a committee of trustees appointed to look into this, we didn't feel his answers gave us sufficient detail in order for us to be able to judge.”

The Charity Commission today said: “We can now confirm that the charity Lifeline Projects contacted the Commission in 2004 to inform us of concerns into expenses payments made to a former trustee. We are working to establish the details of the charity's report to us and our regulatory response.”

Mr Miliband faced questions yesterday over why Mr Flowers had been brought on to the party's business advisory group and further questions about the party's links to the former bank chairman, who has also been accused of incompetence.

The Labour leader told ITV News: “Paul Flowers was somebody who I met with on one occasion and had meetings with a wider group on a couple of other occasions. He was never my close adviser.

“The important thing now is to make sure that the Co-op can go from strength to strength in the future and the police need to look at any matters that arise for them.”

Asked if he welcomes the inquiry, Mr Miliband said: “Let's see what the Government proposes.

“What I am utterly confident about is the Labour Party always acts with the utmost integrity and we did on this occasion too.”

Mr Flowers, who led the Co-op for three years until 2013, is being investigated by the police for allegedly buying and using illegal drugs including crystal meth, crack cocaine and ketamine. He has also been suspended indefinitely by the Methodist Church.

Yesterday Mr Cameron announced that Chancellor George Osborne was in discussions with financial regulators over what form the inquiry should take.

At Prime Minister's Questions in the House of Commons, Mr Cameron told MPs that there were “clearly a lot of questions that have to be answered” in relation to the Co-Op Bank.

“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,” he said.

Tory chairman Grant Shapps also challenged Mr Miliband to explain Mr Flowers' position on Labour's business advisory group and to return a £50,000 donation to Mr Balls' office that he had backed.

Mr Cameron added: “What we can now see is that this bank, driven into the wall 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 leader of the Labour Party.

“And yet, now we know, all along they knew about his past. Why did they do nothing to bring to the attention of the authorities this man who has broken a bank?”

Mr Miliband sought to avert the attack - dismissed by a senior Labour source as “a rather desperate political distraction” - by reminding Mr Cameron that his own party had taken donations from individuals such as Asil Nadir, who was jailed after going on the run when facing fraud allegations.

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.

Additional reporting by PA

Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?

Day In a Page

Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there