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

Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore
'I'm gay, and plan to fight military homophobia'

'I'm gay, and plan to fight military homophobia'

Army general planning to come out
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
America: Land of the free, home of the political dynasty

America: Land of the free, home of the political dynasty

These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
A graphic history of US civil rights – in comic book form

A graphic history of US civil rights – in comic book form

A veteran of the Fifties campaigns is inspiring a new generation of activists
Winston Churchill: the enigma of a British hero

Winston Churchill: the enigma of a British hero

A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Growing mussels: Precious freshwater shellfish are thriving in a unique green project

Growing mussels

Precious freshwater shellfish are thriving in a unique green project