David Davis says Chancellor George Osborne and the Treasury has “serious questions to answer” about the oversight of the Co-op Bank


As published in Leicester Mercury:
Disgraced Flowers held over drugs investigation;
Enquiry call: Chancellor Under Fire Over Bank Issues

Disgraced former Co-op bank chairman Paul Flowers is being questioned by police after he was arrested in connection with an “an ongoing drug supply investigation”.

Mr Flowers, 63, a Methodist minister who was suspended by both the church and the Labour Party following allegations that he bought and used illegal drugs, was detained by West Yorkshire police officers in the Merseyside area and taken to a police station in West Yorkshire.

The news came as the fallout from allegations about his behaviour continued to spread.

Mr Flowers stepped down as Coop bank chairman in June and questions have since been asked about his competence in the role amid claims of illegal drug use, inappropriate expenses, drink-driv-ing and pornographic material on a council computer.

Questions have also been raised about his links with Labour, which has received financial support from the Co-op Group.

But now senior Tory MP David Davis has said Chancellor George Osborne and the Treasury had “serious questions to answer” about the oversight of the Co-op Bank.

“There are really serious questions to answer about what they were all doing,” Mr Davis told the Financial Times.

Issues over the bank’s operations were raised by a rival at the time of a subsequently-aborted takeover bid of Lloyds Bank branches.

“These problems were apparent to a rival and would have been – with a bit of work – to anyone else,” said Mr Davis, who fought David Cameron for the Conservative leadership in 2005.

Asked to respond to Mr Davis’s comments, the Prime Minister’s official spokesman told a Westminster media briefing: “I think what Co-op bondholders and clients want to know is why the Co-op got into the financial difficulties it is in, including the questions about its leadership.

“That’s why the Chancellor is in discussion with the regulators around the appropriate form of inquiry.” Labour – which accuses Prime Minister David Cameron of seeking to “smear” the party over its relationship with the Co-operative – seized on Mr Davis’s comments in a bid to move the spotlight on to the Conservatives. Shadow chief secretary to the Treasury Chris Leslie said: “David Davis is right to say there are serious questions for George Osborne, the Treasury and regulators to answer about how the Co-operative Bank has got into trouble over the past three years.

“What due diligence was done by the Chancellor and the Treasury into the state of the Co-op Bank and its leadership when ministers were encouraging the bank’s failed bid for 632 Lloyds branches? “George Osborne and ministers in David Cameron’s Government must finally come clean and answer questions about what went wrong at the Co-op Bank on their watch and whether they knew of the balance sheet risks.

“Any inquiry must get to the bottom of these issues.”

Mr Cameron has announced an inquiry into the bank’s ailing finances and the decision to appoint Mr Flowers – with details expected to be announced within days.

The Co-op bank has confirmed it is seeking to recover contractual payments totalling £31,000 made to Mr Flowers amid reports he was also the subject of an inquiry into “lavish” expenses claims at the Coop when he resigned from the mutual’s group board in June.