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Corporate capture of the Co-op – and how you can stop it

keep it coopWhen Sir Graham Melmoth raises concerns about what is going on at the Co-operative Group – as he did recently in the Guardian – then it is worth listening. Graham Melmoth was a highly successful Chief Executive of the Group and is the man who saved the Co-op from de-mutualisation.

He is just one of a number of committed co-operators who are highlighting that there is something extremely troubling happening under the cover of the General Election. The Co-op’s new bosses are pushing through what amounts to a corporate takeover of the business, trying to end a century of democratic political involvement.

The Co-operative Group should be an example of responsible and ethical business. In recent years it has sometimes fallen short. In important areas such as executive pay and staff terms and conditions, it has not lived up to its own ethical standards and radical roots. Changing that means resisting the PLC-takeover of the Co-op and returning it to the control of ordinary members. This is the only route to success for the Group, not aping the worst behaviour of their PLC competitors.

The £1m payoff to ex-CEO Euan Sutherland who walked out in 2014 because his telephone number salary was leaked to the papers, is just the start. If management are allowed to get away with silencing members, poorer terms and conditions for employees, spiralling executive pay and City-style short-termism will be just the beginning.

In the run up to the Co-op Group AGM on May 16, the bosses – which now include former ASDA Chief Allan Leighton – have called for a vote on ending funding for the Co-operative Party. This vote would end the historic link with the Co-operative Party and sever the Co-op’s partnership with the Labour Party and the labour movement. They have also given members no choice over their representatives on the new Board, putting forward only three candidates for three seats. Despite the availability of great co-operators including Dame Pauline Green, President of the International Co-operative Alliance, and Nick Eyre a former Group Secretary as willing candidates.

An important principle is at stake here: the principle that democratic organisations like co-operatives and trade unions can and should be engaged in politics and be a voice for ordinary working people.

You can help stop the co-op movement’s political and ethical voice from being silenced and prevent this demolition of the Group’s democracy by pledging your support at the Keep it Co-op website.

If you are a member of the Co-operative Group and have received a pack about their AGM over the last couple of days you should VOTE for Motion 9 and Motion 10. This will send a strong signal to the Co-op Group to return to its radical, progressive roots, with a democratic voice for its members and staff, and a strong voice in politics.

Peter Willsman was a member of the Co-op Group (CWS) Area Committee and Party Council from 1988 to 2010


  1. J.P. Craig-Weston says:

    Correct me if I’m wrong; but following the effective bankruptcy of the Co-op bank, after their disastrous, politically driven and criminally negligent purchase of Britannia Building society, (prior to which they were completely solvent having survived the crash in remarkably good order,) isn’t the Co-op already owned by the American hedge funds anyway?

    1. J.P. Craig-Weston says:

      In September it was discovered that there was a £3.6bn funding gap between the value the Co-operative Bank placed on its loan portfolio and the actual value it would realise if forced to sell the assets.

      In October it was reported that the Co-operative Group had been forced to renegotiate the bank’s £1.5bn rescue with US hedge funds Aurelius Capital Management, Beach Point Capital Management, and Silver Point Capital that owned its debt.

      As a result the Group would lose majority control of its banking arm with the proportion of the bank’s equity remaining under its ownership dropping to 30%, less than the 75% proposed in the original rescue plan.

      The plan passed a creditor vote and on 18 December 2013 a judge on the UK high court allowed the plan to move forward.

      An independent review commissioned by the bank, published in April 2014, concluded that the root of the bank’s problems lay in its 2009 takeover of the Britannia Building Society and poor management controls.

      1. J.P. Craig-Weston says:

        In fact the hedge funds are basically exactly the same group of organizations that Miliband has already declared that he intends to sell-on the state pension scheme to; how good is that?

        1. James Martin says:

          Do you always answer your own questions with cut and pasted responses JP?

          Actually you are somewhat confused. The bank part of the group did indeed cause the crises across all of it due to the huge losses (the rest of the business was doing ok), but selling a majority share in the bank (while retaining the name and a minority share) did not affect the mutual model in the rest of the societies. Also despite the personal failings of idiots like Paul Flowers, a large part of the blame for what went wrong with the Britannia deal (which actually was not the only issue that led to the huge losses) actually lays with KPMG who failed to carry out due diligence (as they had been paid millions to do by the Coop) into Britannia’s accounts. If you are looking for ‘politics’ (and potentially even sabotage) in what went wrong with the bank then I would suggest it lays in that direction.

          1. J.P. Craig-Weston says:

            I’d have to care and for the record as someone who banks with the co-op and who used to work for them; believe me a bigger bunch of self righteous, (I can barely keep my face straight when I hear people trot out all that crap about, “ethical banking,”) cretins it would be hard to find outside politics.

            Too may people in there whose face fitted and not enough who knew or cared about what they were doing, a snapshot in fact of UK most organizations post Blair.

  2. swatantra says:

    Correct me if I’m wrong ut it was the Bankers that caused the Crash of 2008, and it was Brown who saved the world by bringing in QE, and he got little credit for it. The Coop Bank was praised for its diligence and was the only Bnk that didn’t go cap in hand to the Govt for Money. But because of outdated Governance Structures it came a cropper, and brought down the Group as well All that has changed; we are going through a period of transition and will come through leaner and cleaner.
    So Vote to retain the link to the Coop Party so that co-operators are represented in the political arena. he fact is no other Party will speak up for the Coop Movement other than the Coop Party; the Labour Party certainly won’t; it has a different Priority and Agenda.

    1. Robert says:

      The bank has decided to be a stand alone bank, the link as people call it has gone in as much as funding has stopped.

      Now the Coop other then the bank has to look at can it live without the bank, if it can then go for it if not then sadly it will die.

    2. J.P. Craig-Weston says:

      No problem, you’re wrong; it was nowhere near that simple and despite him taking prompt and effective action to address the immediate crisis, (which had it’s origins in the US,) in the short term the mess that Brown and Blair left in their wake will haunt this country for at least another generation.

      The Co-op were pressured into the catastrophically ill judged purchase of Britannia as much by political as by commercial consideration’s in an attempt to create a Labor friendly alternative to the big 4.

      It was daft idea.

      1. swatantra says:

        Unfortunately The CG never found its correct niche. first it was a corner shop serving the community, then it ventured into supermarkets and dept stores, and overstretched itself

        1. swatantra says:

          … and came a cropper. All the while it was trying to compete with ruthless price cutting and the Big 4 copying its ideas and trying to squeeze it from the High Street. The CG started ethical trading and green issues and political campaigning, and the other supermarkets copied the ideas, of Fair Trade and giving grants to the community.
          Poor management, after the mergers, led to the collapse. The Board now has a lot more expertise and business acumen. Better times will come, because the USP of ethical Trading will genuinely always be there, and hopefully the member ownership will keep ethics at the forefront.

          1. Robert says:

            Better time will come for whom, the top table, the money men and women , maybe.

  3. James Martin says:

    While I don’t disagree with the basic message of the article which is to try and maintain the progressive politics within the Coop group, there are actually far wider problems that have led up to this point.

    First, the Coop group is a consumer coop, not a workers one (ironically it is Waitrose, so loved by the middle classes, that is more ‘socialist’ given the employee model than the Coop stores). Of course there are a number of worker coop societies affiliated, but the main structure of the group is not one that is particularly worker friendly (or even at times trade union friendly – look at the experience of GMB being de-recognised in the funeral business for example).

    Next, the Coop Party that Peter seeks to maintain links to is itself problematic from a left perspective. Perhaps it is our fault for not paying it much attention (it is often seen just as a way for some Labour-Coop PPC’s to get more electoral funding), but it is a strong bastion of New Labour (strongly supporting the market-driven NHS Trusts and academy schools) and has questionable internal democracy even compared to the Labour Party these days (it is rare that Coop branches meet, or even that key local issues like the way it will vote as an affiliate in a local CLP on something like a de-selection will be put out to members), so what is left is a somewhat secretive top-down organising structure despite the mutual ideology (I am a member of the Coop Party as well as Labour btw).

    So yes, let’s fight against a corporate takeover and a de-politicisation, but we also need to go much further than that if we are going to link mutualism up in a meaningful way with socialist ideas and practice.

  4. Matty says:

    I’m not an expert on Waitrose but it is not a co-op, it is employee-owned and doesn’t have one member one vote. The higher up the hierarchy you are the more say you have.

    I can’t find figures but I know that traditionally union density in the Co-op Group is far higher than that of most other supermarkets.

    Your criticisms of the Co-op Party’s politics have some vailidity and Pete Willsman will be well aware of them, having fought for decades of the Co-op Party to be more progressive and democratic.

    1. James Martin says:

      Matty, I never claimed Waitrose (in reality John Lewis Partnership) was a coop or a mutual, however in terms of employee involvement it is streets ahead of the Coop stores that are run a s a consumer coop rather than a producer one (which I maintain IS the central weakness of the group). One of the problems in a lot of local coop stores is that when you talk to staff there they have little or no love or loyalty to their employer as they are just like any other supermarket in most respects – and this contrasts with the buy-in from staff that Waitrose gets (although I agree it is definately not a workers soviet!).

      In terms of union density, yes you are correct and this is largely because the other chains are to a lesser or greater extent not union-friendly (to say the least in cases like M&S). In that sense the co-op shops and distribution centres are more like public sector workplaces in that pay and conditions may still not be great, but there is a basic freedom to organise for union reps.

      There is also the fact that the Co-op likes to do a lot of single-union deals with Usdaw. Yes you may say, that makes sense as they are a shop-workers union. However it makes less sense when Usdaw were imposed as the only recognised union in the funeral business (and at the expense of GMB) when the type of jobs there are not what you would associate necessarily with Usdaw, and it is very hard to avoid the suspicion that this was done because Usdaw are under their current leadership a compliant, tame rabidly right-wing union who the bosses like a lot because of its deliberate toothlessness.

  5. peter willsman says:

    James,you are wrong to say the CO-OP Party is a bastion of New Labour.There may be some overlap re.policies but not in membership.I have been going to the Co-op Party Annual Confce.on and off for some 40 years and,thank goodness,it is largely a Blairite-free zone!The Blairites would see the Party as irrelevent and dinosorus.The membership is, left,right and centre, pretty much Old Labour.On average it is loyalist, middle of the road and getting a bit elderly.The vision is still strong and we need to build on this and strengthen the link to Labour and get the LP to take the vision more seriously.The National Council of Labour needs to start meeting again,bringing together the LP,Co-op and TUs.

    1. J.P. Craig-Weston says:

      “dinosorus ?”

      That pretty much says it all.

    2. John p Reid says:

      For once I agree.

    3. Robert says:

      Left right and center, and Progress….

    4. James Martin says:

      Peter, perhaps one little indication of how bad things have got in the Co-op Party is the fact that one of its sponsored MP’s is John Woodcock (who also chairs the Progress tendency), the little twerp in Barrow who has publicly promised to resign from Labour unless we agree to build 4 waste of money WMD’s. He was also very vocal this week in saying how ‘exciting’ it was that WMD builder BAE is taking over a failing Barrow academy as its only sponsor. A shining example of how meaningless socialist cooperative values have become when we allow far-right pro-privatisation war mongers like this scum-bag carry lour name eh!

  6. peter willsman says:

    James,Woodcock is not in line with Co-op Party policy and let’s hope he is not a sponsored MP next time.Yet again, it shows how divisive and destructive are the Misnomer Group,’Progress’.

    1. Robert says:

      I thought I was the only one who could see Progress for what it is.

  7. John says:

    Although Woodcock,is wrong to nails his view to the post, and Is indeed chair of progress, Don’t know why you think it’s destructive, In fact I’d have thought you would have admired someone who’s prepared to leave, as You’ve been trying to oust progress for years.
    as for the Co-op sponsor by suggesting the don’t sponsor him is the divisive thing

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