You can't blame Euan Sutherland for handing in his notice: in the eight months since he took the helm at the Co-operative, things have gone from the mildly challenging to the completely ridiculous: first he had to deal with ‘Crystal Methodist’ Paul Flowers, then he had to think of a way to plug a £1.5bn hole in his balance sheet. Then, over the weekend, he had to cope with someone leaking his pay packet (all £3.6m of it) to the Sunday papers.
Since last night, the group has been trying to work out a way to keep him on, but just after lunch today it issued a statement saying it had accepted his resignation, appoint chief financial officer Richard Pennycook as interim chief exec. Ursula Lidbetter, the group's recently-appointed chairman, said:
'It is with deep regret that I accept Euan's resignation. Last year, Euan and his team saved the Co-operative Bank, without recourse to the taxpayer, and in doing so rescued the Group from the biggest crisis in its 150-year history.'
Sutherland himself wasn't pulling any punches:
'I... feel that until the Group adopts professional and commercial governance it will be impossible to implement what my team and I believe are the necessary changes and reforms to renew the Group and give it a relevant and sustainable future.
'The Group must reduce its significant debt and drive major efficiencies and growth in all of its businesses, but to do so also urgently needs fundamental governance reform and a revitalised membership.'
You could see the cracks starting to show when he took to Facebook to voice his anger after the weekend's leak.
‘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.
‘In a few weeks we will report large losses for the Group in 2013 and in April the inquiry by SIr Christopher Kelly into the Bank crisis will be published. These will bring further low points for us and the reputation of The Co-operative will take another hammering.’
Yesterday evening it all got too much: Sutherland tendered his resignation. In his letter to chairman Ursula Lidbetter (who herself only took over in November), he complained that the group is ‘ungovernable’ under its current structure.
Sutherland’s threat was, as Robert Peston put it on this morning’s Today programme, ‘a back-me-or-sack-me move’. It sounds like the board tried to keep Sutherland on: last night it convened an emergency conference call between board members, during which it agreed to make changes to the structure of the business.
The problem, though, is that any reforms will have to be voted for by the Co-op’s members - which won’t be a particularly speedy process. They’re already unhappy at plans for a ‘bail-in’ which would essentially give a group of hedge funds a majority share in the Co-operative Bank.
Is the Co-op ‘ungovernable’, as Sutherland said? To be fair, saying on Facebook that ‘disaffected people… are determined to make life difficult and embarrassing’ was a mistake: it suggested even Sutherland wasn't completely convinced he should be receiving twice what his predecessor was paid (in his statement this afternoon he made a point of saying he will 'not accept the retntion payments and long term incentive payments previously agreed'). Clearly, there was tension among senior-ranking members over his pay packet, or it wouldn’t have been leaked.
What now? This is a very scary situation for the Co-operative movement. If there continues to be dissention among the ranks, there have been hints much worse could be yet to come. If the group’s backers lose confidence in it, there are suggestions they could push it towards administration. This is make or break for the Co-operative. Not exactly the glorious future the Rochdale Pioneers anticipated.