A fully abridged history of the Co-Op mess from Lord Myners
There’s been quite a bit of superficial MSM reporting today about Lord Myners’ investigation of the Co-Op, as if he might be Snow White disciplining the Seven Dwarfs or something. In delivering a blistering critique of the Co-Op’s management, his Lordship shows once again what a selective memory he has, and why more than one committee before now has found it hard to swallow his account of events here and there.
First up, let’s be clear about something: Myners is not “a Labour peer” in the true sense of the word. Yes, he was ennobled by Gordon of Ourdoom, but no, he does not vote slavishly with Labour peers. He is, for example, not a particular fan of the mutual company form, and he loathes the very ground up which the Co-Op sponsored Ed Balls walks – ridiculing the Morley Mauler’s 50% tax rate as “the sort of thinking that would not earn him an economics O-level”.
The reason Brown ennobled the then Paul Myners in 2008 is because they had a common purpose – if you’ll excuse the small c and p: Myners wanted to save his beloved banking sector at all costs, and Gay Gordon was absolutely desperate to save Northern Rock….surrounded as it was by three Labour constituencies. Rather than go through the irritating process of having Stepford clones elect him, Brown chose to create a peerage…as he sorely needed Myners’ contacts and expertise to help stop the collapse of the Banking sector on his watch.
The depth of Myners’ “socialism” is demonstrated by the fact that, in February 2009, he refused to condemn Fred Goodwin’s RBS pension and payoff, spinelessly doing a Pontius Pilate by saying it was “a matter for the Board of RBS”. By this time he was at the centre of a £750bn rescue operation to save our bankers for the nation….aka, up to his neck in all the jiggery-pokery that went down.
He claimed not to have approved the details of Goodwin’s pension settlement, but former RBS chairman Sir Tom McKillop disputed Myners’ account in later evidence to the Treasury Select Committee, insisting that “every element” of Goodwin’s financial compensation on leaving the bank had been fully discussed with the Peer.
The TSC concluded in their report that “…it would have been far better if Lord Myners had given a stronger, clearer direction of Government requirements for a bank in receipt of public funds – and had assured himself by demanding to be kept informed of the detailed negotiations that were taking place…. It would, we believe, have been open to Lord Myners to insist that Goodwin should have been dismissed…. The RBS Board had shown itself to be incompetent in the management of the bank, steering it towards catastrophe… We suspect that Lord Myners’ City background, and naiveté as to the public perception of these matters, may have led him to place too much trust in an RBS Board that he himself described to us as “distinguished”.
By which he perhaps meant “distinguished by its inability to grasp that ABN Amro was an obvious crock of excrement”.
Given that context, I’m not really sure why the MSM is giving Myners such an easy ride about his excoriating criticism of the Co-Op’s Board; but I’m buggered if The Slog is going to do the same. Let’s revisit some Co-Op history not as yet airbrushed by the Ministry of Truth.
The Minister in charge when the Co-Op was ‘chosen’ to buy the Lloyds retail detritus in 2011 was a Mr George Osborne, Chancellor of the Exchequer. The Sunday Telegraph reported in July of that year how Citigroup and JP Morgan would advise Lloyds on the process. By December 2011, the Co-op was ‘chosen’ as the preferred bidder, and entered exclusive talks to sign a deal. In fact, Lloyds received three bids, but the Co-Op was preferred by most of those in Government…especially Mr Vincent Cable, the LibDem Business Minister.
Andrew Bailey at the Prudential Regulation Authority (PRA) later told legislators, “UK regulators decided the Co-Op Bank may need capital in 2011, but waited until there was greater visibility about the possible outcome over its intention to buy branches from Lloyds Banking Group Plc” before informing the public. The PRA formally told the Coop it would need to raise capital “at the end of 2011″. None of the Bank’s directors deemed this an important piece of information for investors.
That was – make no bones about it – a clear and present fraud. But the Osborne/Cable axis was desperate to press ahead…rather than have the markets get even more doubtful about Britain’s banks. (At the time, Osborne hailed the deal, declaring, “This is another step towards creating a new banking system for Britain that gives real choice to customers and supports the economy.”)
I don’t see any reference to this from the Myners Bird in his account today of why the Co-Op needs ‘a radical shake-up’. Perhaps it just needs to be left alone by Westminster sociopaths to get on with its business of being a mutual trying to invest in ethical sectors….and putting its members first. All of which brings me back to Screaming Ed Balls.
This part of the fairy story begins with the actions (or rather, inaction) of the Financial Service regulator (FSA) during 2008 when – despite the fact that most High Street banks at the time were close to the edge and facing near-certain ruin – the Co-Op gaily carried on paying dividends and underwriting the activities of the Coop’s supermarkets suffering from intense price competitition. An insider at the time suggested to me that “there was no way either the regulator or the Treasury and the Bank of England could have failed to notice the Coop’s inexplicable behaviour.”
Some believe Alistair Darling didn’t want a “cooperative” bank being seen to be odd in a failing sort of way. Others maintain that Gordon Brown was the prime mover in turning a blind eye to the eccentricity….even allegedly applying massive pressure upon the FSA not to act. But one senior Labour MP – Ed Balls – was (and is) a Coop sponsored MP: and he knew that 30 or more others were. He made it aggressively clear to all the parties involved in the Labour Movement that the end of the Co-Op would be the end of the Labour Party as a solvent political influence.
Gordon Brown’s ailing Labour Government chose to muddy the waters by using the Co-Op to help save another disaster: the Britannia Building Society. Brown and Balls presented the two institutions as strong players free of the neoliberal banking madness. In fact, Britannia’s real situation was awful. But Balls, 32 Labour MPs, Unity Bank – and all the Trade Unions of any size – were mightily relieved. So too were Nick Clegg’s LibDems, who also bank with the Coop.
In forgetting this too (in his lofty judgement upon the Co-Op) Lord Myners might seem to be looking in two political directions at once. But he isn’t at all: Myners is merely keen to protect his two most important paymasters: the City, and the political class.
His ennoblement and then employment by Brown is ample proof of a commercial interest in that sphere….in 2007 he gave £12,700 to Gordon Brown’s leadership campaign. As for the City as an alma mater, let’s run through the Myners cv should we?
From 2002 to 2007 he was chairman of Aspen Insurance Holdings, a Bermuda-based insurance company. Ah yes, Bermuda – that well-known upholder of the Sovereign’s right to tax income.
In June 2011, Lord Myners became chairman and a partner of Cevian Capital (UK) LLP, the UK arm of Cevian Capital, the largest active ownership manager in Europe. In January this year, Cevian took a larger stock position in the arms maker Thyssen-Krupp. Very Co-Op. Very ethical.
In March 2013, Lord Myners joined the board of OJSC MegaFon, the London-listed company that is one of the three largest mobile phone operators in Russia. The Russian Federation is, as annye foole know, a bastion of the Rule of Law.
Right then. This is the man pronouncing on the professional and moral shortcomings of “cronies” in the Co-Op Group. But Lord Myners also seems a little light on the details of how Hedge Funds became involved in a mutual organisation, why the depositors were lined up for Britain’s first bailin, and where things move from here.
In judging the last of these, we should all be aware of this gentleman’s real interests.