British police arrest former Co-op Bank chairman in drugs probe

Fri Nov 22, 2013 12:11pm EST
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By William James and Matt Scuffham

LONDON (Reuters) - British police have arrested the former chairman of the Co-operative Bank as part of an investigation into the supply of illegal drugs, ratcheting up pressure on the 141-year-old bank as investors mull plugging a $2.4 billion capital shortfall.

Prime Minister David Cameron has questioned why Paul Flowers, a one-time local Labour politician and Methodist preacher with no banking qualifications, was judged suitable for the chairmanship during a period when the bank nearly collapsed.

Finance minister George Osborne ordered an inquiry into the bank, just as its parent Co-operative Group seeks approval from bondholders and preference shareholders for a rescue plan that gives a group of hedge funds control of a bank which once promoted its ethical credentials.

The publication of a video by the Mail on Sunday which the newspaper said showed Flowers arranging to buy crack cocaine and crystal meth propelled the Co-op into a political storm over the executive's links to leaders of the opposition Labour party.

Police said a 63-year-old man was arrested in the Merseyside area of northern England late on Thursday and taken to a police station to assist detectives with their enquiries.

Flowers has not yet directly addressed the allegations of drug use, but after the video appeared he released a statement through the Methodist Church saying he had a difficult year.

"This year has been incredibly difficult, with a death in the family and the pressures of my role with the Cooperative Bank. At the lowest point in this terrible period, I did things that were stupid and wrong. I am sorry for this, and I am seeking professional help, and apologize to all I have hurt or failed by my actions," the statement said.

He quit his post as deputy chairman of Co-op Group in June - at the same time as he quit the bank - and the BBC has reported this was because of concerns about his expenses and competence.   Continued...

A sign is seen outside a branch of the Co-operative Bank in central London May 10, 2013. REUTERS/Toby Melville