One of the regulators who rubber-stamped the appointment of disgraced former Co-op Bank chairman Paul Flowers later landed a job with the troubled lender, according to reports.
Graeme Hardie was one of the Financial Service Authority's ‘grey panthers' - seasoned financial experts drafted in to help vet senior banking appointments, the Daily Mail reports.
And well-placed sources confirmed Hardie was on the FSA panel that interviewed Flowers when he was chosen as chairman of Co-operative Banking Group in 2010.
Flowers has since been discredited in the light of revelations about the alleged use of drugs including crystal meth and the horse tranquiliser ketamine.
Earlier this year Hardie was recruited by the Co-op Bank as a non-executive director, a role that typically commands a salary of between £30,000 to £50,000 for several days work a year.
Flowers is understood to have been instrumental in selecting Hardie.
MPs last night lashed out at the FSA for allowing Flowers - who had just four years' experience in banking between 1968 and 1972 - to take the chair at a major bank.
Treasury committee chairman Andrew Tyrie MP said the FSA's approved persons regime - designed to weed out poor candidates - had ‘degenerated into little more than a bureaucratic box-ticking exercise'.
He urged ‘radical reform' of the process, including licences for those accepting senior banking positions.
Fellow committee member Mark Garnier MP called for regulators to give evidence about their role in the debacle.
While the FSA did not block Flowers' appointment, the regulator was sufficiently worried that it ordered the Co-op to recruit two deputy chairmen with experience in financial services.
The Co-op subsequently employed insurance industry veterans Rodney Baker-Bates and David Davies to supervise to Flowers.
All three were on the board of the bank when it was weighing up its ultimately doomed bid for Project Verde, 632 branches put up for sale by Lloyds Banking Group.
One figure with intimate knowledge of the Co-op's board said the two men were the only directors who voted against Project Verde. They were outvoted and the bank went ahead with the deal, before pulling out when it discovered a £1.5billion black hole on its balance sheet.
The Co-op said last night it had launched a ‘root-and-branch' review of rules governing its stewardship.
Prior to revelations about his private life, Flowers' suitability was called into question when he told the Treasury committee the bank had a £3billion balance sheet when the true figure was £47billion.
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