Euan Sutherland’s brief reign at the Co-operative Group has been little short of a disaster for the 170-year-old mutual organisation.
Brought in to restore its reputation and return it to financial health, he has failed. Now his own reputation is looking as tarnished as that of the group he has just quit.
Slamming the organisation as “ungovernable”, Sutherland tendered his resignation on Monday, sending the 20-strong Co-op board into crisis. An emergency board meeting was convened late that night, via telephone, at which reforms to the group’s governance structure were agreed in an attempt to persuade the chief executive of just 10 months to stay on. But Sutherland’s departure, formally accepted by the Co-op yesterday, was inevitable after weekend revelations about his lavish pay deal – and his ill-judged reaction to the leak.
For his first year, Sutherland’s package was to total £3.66 million, made up of a salary of £1.5 million and a retention bonus of £1.5 million, plus pension contributions and the cost of buying him out of his previous contract. Other executives – who, like Sutherland, do not serve on the board – also high received retention payments and salary deals.
The figures, thought to have been leaked by a disaffected board member, caused anger within the co-operative movement, which is facing thousands of redundancies as it struggles to recover from the £1.5 billion black hole in its banking arm. Annual losses are expected to reach £2 billion.
Sutherland’s reaction to the leak was to post a rant on the Co-op’s Facebook page. Noting the leak appeared, once again, to come from the boardroom, Sutherland said one or more directors were “determined to undermine me personally”.
The last thing the Co-op needed was to have its internal strife so publicly exposed.
In Sutherland’s defence, the Co-op Group undoubtedly has a Byzantine and unworkable management structure. Its board is entirely non-executive, and includes a retired publisher, a self-employed plastering contractor, a retired telecoms engineer, a lecturer and a computer technician.
In his resignation statement, Sutherland took another sideswipe at the group, saying that until it adopts professional and commercial governance, it will be impossible to implement the changes needed to secure a sustainable future.
Now the search for a new chief executive begins. The dramatic events of the past few days will leave potential candidates in no doubt as to the scale of the task facing them.
Off the record
Historians have been shocked by the revelation from a Bank of England official yesterday that Threadneedle Street routinely destroys recordings of its monthly meetings on monetary policy.
Bank of England governor Mark Carney and members of the bank's monetary policy committee were undergoing one of their regular grillings by MPs on the treasury select committee. Subjects under discussion included the quarterly inflation report, Scottish independence and the escalating row over foreign exchange manipulation – a scandal many fear will be even bigger than Libor rigging.
In answer to a question by committee chairman Andrew Tyrie on what happens to records of the monetary policy committee's discussions, the bank's Paul Fisher admitted recordings of the meetings, on which the minutes are based, are not stored but destroyed. No transcripts are made, Fisher said, because it had proved impossible to transcribe the tapes in a way "which made any sense", with members talking over each other and engaging in a "very free-flowing" discussion.
Tyrie was aghast, pointing out that most organisations manage to transcribe a record – “even the House of Commons”.
Tyrie advised the bank to invest in better tape recording facilities – and also had some advice for the governor, suggesting Carney chair the MPC “in a way that enables people to speak so that they can all be heard for the benefit of the transcriber”. Ouch.
Fiona Walsh is business editor of theguardian.com
