Co-op chief offers his resignation

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File photo dated 16/07/13 of a Co-operative food store as the embattled Co-operative Group posted a rise in festive sales across its supermarket arm thanks to a robust performance from its smaller convenience stores. PRESS ASSOCIATION Photo. Issue date: Wednesday January 8, 2014. The Co-op sought to put the woes at its banking business behind it as it hailed

Co-operative Group chief executive Euan Sutherland has offered to quit, days after claiming his efforts to overhaul the business had been undermined by a high-level leak of his £3.6 million pay deal.

A source confirmed that Mr Sutherland resigned yesterday in a letter to group chairman Ursula Lidbetter, claiming the business had become "ungovernable".

He was said to have offered to go on a "point of principle", amid resistance to his plans to overhaul the troubled business after a year in which it faced the worst crisis in its history.

Conversations were expected to be under way today about who would immediately be taking over his duties, though there were suggestions that the board may yet persuade him to stay after what the BBC reported as a "back-me-or-sack-me" move.

In an emergency call last night following the letter, board members agreed to a shake-up of its structure which will split off representatives elected from its membership from the core "plc" type board overseeing the running of the business.

A source said of Mr Sutherland's resignation: "He resigned on a point of principle. He didn't do it lightly.

"A series of events led him to the conclusion that the business was ungovernable and that there were people trying to stop the reforms that were necessary."

The leaking of details about his bumper pay deal - which he was said to feel was an attempt to destabilise him and prevent him pushing through changes - was reported to be a factor in his
decision.

However, Labour and Co-operative Party MP Meg Hillier criticised the move, telling BBC Radio 4's
Today programme it was a case of "throwing your toys out of the pram".

It emerged at the weekend that Mr Sutherland was in line for a £3.6 million package despite the Co-op facing a £2 billion loss after the biggest crisis in its history.

In a Facebook post apparently from the chief executive, he expressed his frustration about the figures being leaked to the Observer newspaper, saying they appeared to have come "from our group
boardroom".

"We seem to have an individual, or individuals, determined to undermine me personally, my team and the rest of the Group Board regardless of the uncertainty and disruption this causes to our 90,000 colleagues and our supportive members.

"Despite this, I am determined that we will see through the vital transformation of our business.

"We appear to have disaffected people who are determined to make life difficult and embarrassing for The Co-operative at a time when what we need most are professionalism and loyalty to the business."

The group is facing large-scale job cuts after a disastrous year in which its banking arm needed to be rescued when a £1.5 billion hole was discovered in its balance sheet.

It is now facing an overhaul as well as a series of investigations into what went wrong, as well as continuing questions over the appointment of disgraced bank chairman Paul Flowers despite a lack of knowledge of the sector.

He was later exposed in a newspaper drugs sting.

The governance reforms agreed by the wider group last night appeared to address concerns about the Co-op Group's democratic membership structure, which saw Mr Flowers ascend to the helm of the bank despite his financial inexperience.

These proposals will see the current 21-member board structure abolished to be replaced by two boards.

One of these will take the form of a "plc" style grouping of executive and non-executive directors, while the other will consist of members and colleagues responsible for maintaining the group's "values and principles".

Meanwhile, the BBC reported that one executive feared the group's debts could see it put into administration if its top management is seen as fracturing.

A source dismissed this as speculation but conceded that the Co-op's lenders were likely to be taking an interest given the scale of the losses it was facing.

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