Len Wardle, the long-standing chairman of the Co-operative Group, has resigned with immediate effect after he admitted "serious questions" were raised by the drugs scandal involving former banking chairman Paul Flowers.
Mr Flowers, a Methodist preacher who oversaw the Co-op bank’s near collapse, was recently caught on film allegedly arranging to buy cocaine and crystal meth, prompting calls for an inquiry into how he had been appointed chairman of a bank.
Mr Wardle, a senior figure in the appointment of Mr Flowers as chairman of the Co-op bank, said he was resigning now instead of next year as planned.
“I led the board that appointed Paul Flowers to lead the bank board, and under those circumstances I feel that it is right that I step down now, ahead of my planned retirement in May next year,” Mr Wardle said in a statement.
Co-op said Mr Wardle would be replaced by Ursula Lidbetter, currently group deputy chair and chief executive of the Lincolnshire Co-operative Society.
Ms Lidbetter will lead the group through a review prompted by the Mr Flowers scandal.
Mr Flowers, dubbed the “Crystal Methodist” by British tabloids, issued a statement last week saying he was seeking professional help. He has been suspended from his religious duties.
Mr Flowers was chairman of the Co-op bank from 2010 until July this year, a period when it racked up huge losses and faced a £1.5 billion capital shortfall. The Co-op Group has since lost its majority stake in the bank to US hedge funds that owned its debt.
Mr Flowers’s banking knowledge came under scrutiny when he appeared before lawmakers on the Treasury Select Committee earlier this month. At one point he told the committee that £3 billion of assets sat on the bank’s balance sheet when in fact it holds 47 billion.
Members of the committee now want the financial watchdog to be questioned over how Mr Flowers became chairman of the bank.