Vice chairman? Downfall of ex-bank boss grips UK

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Associated Press

Posted on November 22, 2013 at 5:04 AM

Updated Friday, Nov 22 at 8:05 AM

LONDON (AP) — He was a bank boss, but had no apparent banking experience. He was a Methodist minister, but got busted for allegedly buying cocaine and downloading porn at work.

The spectacular downfall of Paul Flowers, the former chairman of Britain's Co-operative Bank, was a tale made for the splashy British tabloids. His troubles began with the near collapse of the bank he was heading, but came to a head this week when a newspaper released footage that showed him handling over cash to a dealer selling hard drugs including crystal meth and ketamine.

Flowers, 63, has apologized for his "stupid and wrong behavior," but his humiliation continues.

He was arrested late Thursday as part of a drugs investigation, as more shadowy details are being dug up about his life.

It emerged this week that the former banker and minister was found with "inappropriate" adult material on his work computer when he was a local official for the opposition Labour Party in 2011.

And on Thursday, the Methodist Church in Britain said Flowers was disciplined and briefly suspended after he was convicted of drunk driving and an act of gross indecency years ago.

Those revelations, together with Flowers' poor leadership of his bank, left many in disbelief: How did a man like him become appointed as a bank chairman in the first place?

That was the question asked by Prime Minister David Cameron, who on Wednesday ordered an independent inquiry into the role of Flowers at the Co-op. Flowers, who stepped down in June after three years at the bank, is already under police investigation for the drug allegations.

"Reverend Flowers has deeply let down the people who entrusted him to be the chair of the bank," said Ed Miliband, leader of the Labour Party. "Obviously he has deep questions to answer about that."

Flowers first came under scrutiny in late October, when he failed to answer basic questions about his bank at a parliamentary committee. The company has since fallen deeper into financial trouble. It has had to plug a 1.5 billion pounds ($2.4 billion) hole in its finances, and recently agreed to a bailout plan by hedge funds.

But it was his personal life that became the subject of scandal this week, when the Mail on Sunday said it had filmed Flowers buying the drugs in a car just days after the committee hearing.

"This year has been incredibly difficult with a death in the family and the pressures of my role with the Co-operative Bank," Flowers said in a statement afterward. "I am sorry for this, and I am seeking professional help."

After the footage emerged, West Yorkshire police said they were making inquiries.

They arrested Flowers late Thursday in Merseyside and the ex-bank boss remained in custody early Friday.

Since the publication of that footage, Flowers has been suspended from his church and the Labour Party. The chairman of the Co-op Group, which owns the bank, also resigned on Tuesday as the scandal continued to grow.

Britain has had a string of bad bank scandals since the 2008 financial crisis, but the Co-op Bank is the last place many people would expect things to go so horribly wrong.

Although the Co-op Bank is much smaller than other bailed out institutions like the Royal Bank of Scotland or Lloyds TSB, its failure hit hard because the company behind it, the Co-op Group, is the country's largest mutual society and had always stressed that sound values guided its work.

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Associated Press writer Cassandra Vinograd contributed to this report.

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Follow Sylvia Hui at http://www.Twitter.com/sylviahui

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