Regular readers may have noticed that, given the recent furore involving the Cooperative and my previous blogs about them, I haven’t yet taken the opportunity to write something new about the whole sorry affair. Well, if you have noticed that, then this is it.

As you may know by now, over the years I have developed a cautious (some may say cynical) mistrust of the flow of information as it is presented to us by the usual conduits. So when a story that has been simmering away for years suddenly breaks open thanks to a catalytic event like a drug-snorting, rent-boy loving Minister with no banking experience or apparently, any fear of discovery, I take a step back and just think, hmm, (affecting a cockney accents) “waz all this abaat then?”.

I don’t want to speculate about Paul Flowers drug habits, it seems quite obvious from the material released by the Daily Mail that he is a frequent and experienced lifestyle drug user. The more interesting questions I think, are, why now? What purpose does this serve (if any)? And how does this relate to the wider issues?

If the narrative of the media is to be believed, here is a man who has blazed a trail of incompetence and hedonism throughout his career in various guises, as a bank chairman, a Methodist minister, a Labour councillor and as a representative in various charities over several years. The floodgates have opened, it’s all coming out now, as if a thousand whistle-blowers have only just learned how to blow.

So what does this mean, given that it took the moral outrage of a man he met on a dating site, who attended drug parties with him and decided to secretly film him out of disgust with his hypocrisy, for this all to come to light? We could believe that large sections of the banking, political, religious and  even charity fraternities were all so naive and trusting as to not have noticed his behaviour over the years. As if this was a surprise and shock to them all – but that can’t be true, can it? Not given the deluge of past indiscretions that have now surfaced. So scrap that. But what’s the alternative? That at least some of these people did know about his lifestyle choices and inadequate faculties for the positions of power he held?

That latter option, which seems logical, is far more intriguing and worrying. What if, for example, key figures were acutely aware of his character, and used that to their advantage? It may sound far-fetched to you, but is it as far-fetched as a man who managed to avoid other major scandals from surfacing throughout his career, suddenly being caught out by a bloke with an iphone? If so, this incompetent buffoon (Flowers I mean), was up until that point, a master of deception and discretion, which doesn’t fit the narrative we are being given.

The obvious reason for having a fall guy like him at the top of a politically aligned bank, is that if it all goes wrong, you can just point the finger and say “he did it”. Which, given the ongoing inquiries into the Coop/Lloyds fiasco and the Coop’s own legacy funding problems, seems like a good time to do it, don’t you think? “Oh,” we collectively sigh, “it’s because they were being run by a druggy rent boy using idiot… that explains it then.”

But it really doesn’t, does it? And I know that the parties have all started slinging mud around as to who knew him, and how much they knew him and so forth, but despite that, the more important questions will now sit behind a sleazy, tabloid image of Paul Flowers in a car park buying crack, and jokes about crystal Methodists.

There are still some massively important questions to be asked about the whole affair, the majority of which sat not just with this one chairman, but with the various executive management teams, the interested political parties and the limp regulators. For the sake of posterity, I will record them here:

1.            The Buterfill Act.

When the Coop and Britannia announced the ‘merger’ of two profitable companies that had complementary synergies and would form a ‘super-mutual’ alternative to the big high street banks (that had been oh-so damaged by the global crash) – there was just one problem – just a little problem, nothing major really – THE LAW.

It was currently not possible for a bank to merge with a mutual, and as the Coop is basically a bank (with the only shareholder being the customer base) an act of parliament had to be drafted and passed before the house in order to allow this transaction to take place. The act was sponsored by Conservative peer, Sir John Buterfill, and passed, after it was announced the two businesses would merge.

At the time, Paul Flowers was still chairman of the Coop (a Labour councillor remember) while a Tory peer sponsored the act to allow a Labour (and Lib Dem) supporting bank to merge with a Building Society. It is hard to believe that this act did not attract the most careful scrutiny at the time, given the various interested parties and specific nature of its creation.

The customers and staff were told that both businesses were viable, profitable, and mostly unscathed by the credit crunch. They were told this was a merger, yet, even though the law of the land had to change, and massive regulator involvement was needed, this turned out not to be the case.

On a separate note, I was told directly (at a later date) that this was not the case. Britannia was in trouble, and without the take-over, sorry, I mean, merger, it would have gone down the pan. Which leads me to:

2.            The Britannia Members Vote to merge.

Given the above, and what has transpired, I would suggest that the entire member base of Britannia was deceived into voting for the merger to take place. The member vote was constitutionally necessary, and a bright rosy picture of synergies and super mutual’s was painted. If this turns out not to be the case – who is responsible, and what recompense or punishment is due? Given that we now know there was a bad loan book (all be it, not as bad as it is being represented by the Coop in recent inquiries) – this seems to be highly likely.

3.            The write-down of IT.

I worked for the Coop during the ill-fated IT upgrade that eventually cost them around £148 million according to their own accounting, which as we have seen, is probably not to be trusted. I would wonder if perhaps (again as was hinted to me directly) – a little creative accounting reduced this number down from a much more substantial figure. How was this figure arrived upon? A close look at the balance sheet may be a good idea. I worked on this project (all be it in a junior capacity) and the figures that were being quoted throughout the three years it was ongoing, were higher than this, much, much higher than this. Senior figures were popping off left right and centre when it became clear the IT upgrade was not happening, and apparently the Coop had been at it for many years before the Britannia merger, and still to no avail.

This may seem a smaller point that the others, but this is customers money they were spending, and the big accounting firms, the IT company itself and many third party contractors, all got their slice and left the company with virtually nothing to show for it. (not to mention the executive wages and pay-offs throughout).

So, I think that will do for now. There are obviously dozens more questions to be answered, many of which being heard by the select committee at the moment, but given the close political links to this affair, are they really best suited to be investigating this?

I would hate to see the media narrative use the whole sorry Flowers affair to divert attention from these issues. Let’s not forget that the culmination of all these failings is that both the UKs second biggest mutual (the Britannia) and biggest member owned cooperative are looking likely to end up mostly owned by American hedge funds as a result of all this, or in need of a bail out etc… So the ‘survivors’ of the Global Crash have finally caught up with the rest of the financial industry, it just took some twists and turns to get there.

Let us also not forget, that we still have not seen senior figures of financial institutions, political parties, regulators or big accounting firms go to prison or face any meaningful punishment for what they did to us all, quite the opposite in fact, they were handed their lifestyle back on a plate, and we were told to swallow austerity as a consequence.

So, they can give us Flowers, but it’s not enough.