Co-op ‘mismanaged’ in past says Pennycook

CO-operative Group chief executive  Richard Pennycock has said the troubled company and its stakeholders had been “let down” by its former management.

In an interview with BBC Radio 5 Live, Pennycock laid the blame for the much publicised troubles of the Co-op – founded in Manchester 150 years ago – on the previous regime and its “undermanagement”.

Pennycock, who was appointed temporarily last year before his role was made permanent, said the Co-op needed to return to making profits and said the group which is focusing on its grocery outlets and funerals could compete with retail giants like Tesco.

“We let the co-operative movement down in a fairly significant way, after 150 proud years where the Co-op had the reputation for doing the right thing,” he said.

“Just applying good management disciplines and taking out costs can improve profitability.”

The group, which holds its annual meeting on Saturday, continues to hold a 20% stake in the Co-operative Bank, which is mainly in the hands of US hedge funds.

Meanwhile Co-operative Group is threatening injunction from influential owner-member Midcounties, the largest of the six independent societies which collectively own 22% of the Co-op.

This is over the procedures adopted while appointing three nominated directors to the board.

President of Midcounties, Ruth RitzJohn told The Guardian that legal opinion it had sought “indicates indicates in the strongest of terms that the results of the election will be void if it proceeds – a most serious situation for the Co-operative Group, as in future board decisions could be invalid”.

However, the Co-op said it was confident it had run the election “in an open, objective and transparent manner and totally in line with the rules and regulations put in place by our members”.

And the threat of a successful legal challenge receded after the East of England society accepted an assurance from the Co-op leadership would be reviewed for next year.

Three candidates to have made it on to the ballot paper were Hazel Blears, the former Labour cabinet minister; Ruth Spellman, chief executive of the Workers’ Educational Association; and Paul Chandler, former chief executive of Traidcraft.

Rejected candidates were Dame Pauline Green, president of the International Co-operative Alliance; Nick Eyre, a lawyer and former Co-operative Group secretary; and John Briddon, regional stores director at the Co-op.