Co-operative bank ex-chair jailed over fraud

Paul Flowers, the former chairman of the Co-operative Bank, has been sentenced to three years in prison after pleading guilty to 18 counts of fraud totaling £100,000. The 74-year-old ex-banker and Methodist minister was convicted of stealing money from an elderly friend with dementia, using the funds to finance drug purchases, holidays, and personal gifts.

Flowers, once a prominent figure in both finance and the Methodist Church, served as executor of the will and holder of power of attorney for Margaret Jarvis, a longtime friend. Instead of safeguarding her financial interests, he systematically drained her savings, continuing to withdraw money even after her death in 2016.

His sentencing at Manchester Crown Court comes after he initially failed to appear earlier this month, prompting the issuance of an arrest warrant.

Judge Nicholas Dean KC described the case as a story of betrayal, emphasizing how Flowers exploited the trust placed in him by an elderly, vulnerable woman. The judge remarked, this is a story of betrayal, no less than that. Betrayal by you of an old friend, someone who trusted you, who had every reason to believe she could trust you. In truth, you knew all along she could not, because of your own weaknesses and failings.

Flowers' criminal downfall follows a series of scandals that have tarnished his once-respected public image. Having served as chair of the Co-op Bank between 2009 and 2013, he resigned just before a £1.5 billion financial black hole was uncovered in the bank’s accounts. The Treasury Select Committee later criticized the board’s governance as an accident waiting to happen.

Shortly after stepping down, Flowers became the subject of a tabloid exposé, when a Mail on Sunday report published footage of him handing over £300 for crystal meth and other drugs in Leeds. The scandal earned him the nickname the Crystal Methodist, a play on his religious background and drug use.

Flowers later admitted to possessing cocaine, crystal meth, and ketamine, resulting in a £400 fine after pleading guilty in Leeds Magistrates’ Court. He was also banned from the financial services industry by the Financial Conduct Authority (FCA), which found him unfit to work in the sector due to his conduct while at the Co-operative Bank.

The FCA ruling highlighted that Flowers had used his work email to send and receive sexually explicit content, engaged in drug-related discussions, and made inappropriate calls to premium-rate chat lines using his work phone. The watchdog’s executive director, Mark Steward, stated, Mr. Flowers failed in his duty to lead by example and to meet the high standards of integrity and probity demanded by the role. These high standards are what the financial services industry and the wider community rightly expect of its senior individuals.

Following the drug scandal, Flowers was removed from the list of Methodist ministers and stripped of the title Reverend, with the church concluding that his actions seriously impaired its mission and integrity.

In a 2016 interview, Flowers acknowledged his drug use and involvement with male sex workers while holding a senior position at the Co-op Bank but maintained that he had tried to be a decent Christian person, adding, please don’t laugh too horribly.

Paul Flowers' experience in the financial sector is best known for his tenure as chairman of the Co-operative Bank from 2009 to 2013. His appointment to the role was controversial, as he had limited banking experience, primarily having served as a Labour councillor and Methodist minister before taking on leadership responsibilities in the financial industry.

During his time as chairman, the Co-operative Bank faced significant financial difficulties, culminating in the discovery of a £1.5 billion shortfall in its finances. This crisis led to Flowers resigning from his position in June 2013, shortly before the extent of the bank’s financial troubles became fully known. The Treasury Select Committee later criticized the governance of the bank, describing it as an accident waiting to happen, and highlighting failures in oversight.

In addition to the financial mismanagement under his leadership, Flowers' tenure was further overshadowed by personal scandals, including the use of drugs and inappropriate conduct while in office. Following his resignation, the Financial Conduct Authority banned him from working in the financial services industry, citing his lack of fitness and propriety due to his misconduct, which included using company resources for personal activities, engaging in drug-related discussions, and making inappropriate calls to premium-rate chat lines.

His tenure at the Co-operative Bank remains one of the most infamous examples of poor governance in the UK banking sector, with his lack of financial expertise, combined with personal misconduct, contributing to his downfall and the financial instability of the institution he led.

. Photo: The Co-operative, This file is licensed under the Creative Commons Attribution 2.0 Generic license.