When you buy a house, you ask the surveyor to check the foundations and look out for subsidence. Businesses do the same, hiring outside experts to carry out "due diligence" on a purchase. Before the Co-operative agreed to buy Britannia building society in 2009, it paid
Yet Britannia, it turns out, was riddled with bad commercial loans - contributing pounds 550m to the Co-op's losses.
A damning report this week by Sir
Should Co-op sue
Years later, we don't know if anyone really did. This suggests an extraordinary failure by the Co-op's board, the sort of "governance" problem that has led
But it should be noted that the execrable commercial loan decisions were taken by Britannia - which at the time had a governance structure that is near-identical to Nationwide building society today. This suggests it was not necessarily governance that was at the heart of the problem. If, back in 2009, the Co-op had in place the board structure that is proposed today, can we really be sure that the takeover of Britannia would not have happened? After all, JP Morgan Cazenove told Co-op that the commercial logic of the merger was "compelling".
On 17 May the future of the
What is undeniable is that the Co-op is in a tragic mess. Governance reforms are inevitable and should be accepted at the vote, even if it means holding your nose when voting. Without a vote in favour, it may struggle with future debt issues. But governance reforms alone won't save it. They may be crucial at board level, but for customers at the supermarket checkout or picking up a prescription in the pharmacy, they are near meaningless. The challenge for the Co-operative now is to make commercial sense of its values, ethics and principles.
In the past it had the "divi", but that space is occupied by loyalty schemes such as Clubcard and Nectar. Nor is its ethical/organic/fairtrade food policy uniquely appealing when many other supermarkets (look at
What would make me shop more at the Co-op? How about paying checkout staff the living wage (pounds 7.65 outside
What would make you want to shop there?
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