CEO of Britain's Co-Op Group resigns

Tuesday 11 March 2014 18.21
Co-operative Group's CEO says the business is 'ungovernable'
Co-operative Group's CEO says the business is 'ungovernable'

Britain's Co-operative Group has announced the resignation of chief executive Euan Sutherland, throwing the troubled mutual into a fresh crisis.

He will be temporarily replaced by chief financial officer, Richard Pennycook, until a new CEO can be found, the Co-operative said in a statement.

Mr Sutherland has decided to step down after less than a year at the helm, blaming the failure to reform the governance of the mutual that is owned by its 4.7 million customers.

"It is with great sadness that I have resigned," Mr Sutherland said in the official statement.

"I have given my all to the business and had hoped to be able to lead its revival.

"However, I now feel that until the group adopts professional and commercial governance it will be impossible to implement what my team and I believe are the necessary changes and reforms to renew the group and give it a relevant and sustainable future."

The resignation was also sparked by a leak of details of Mr Sutherland's £3.5m pay package for 

In a message on Facebook over the weekend, Mr Sutherland blamed "an individual, or individuals" at the top of the group for seeking to undermine him.

The resignation also comes after a tug of war between Mr Sutherland and the group's board of directors over how the supermarkets-to-funeral homes conglomerate should be run.

Mr Sutherland will meanwhile forego a 1.5-million bonus and long-term incentive payments that were due for his role in securing the group's banking division.

The Co-operative Bank came close to collapse last year after the lender was ordered by regulators to increase its capital cushion by £1.5 billion.

The bank - which prides itself on ethical investments - was subsequently forced into a drastic restructuring that handed control to US hedge funds in order to plug the vast black hole.

Co-op Bank slumped into further crisis last November after its former chairman Paul Flowers, a Methodist minister, was filmed allegedly planning to buy illegal drugs.

The bank now faces a series of investigations into what went wrong, and ongoing questions over the appointment and suitability of Flowers, who lacked knowledge of the financial sector.