Former City minister Lord Myners has warned the Co-operative Group will not survive unless members get behind his recommendations for reforming its governance structure.
His review's findings - which include the abolition of the group's 21-member board to be replaced by a slimmed-down body containing more corporate figures - will be put before the Co-op's AGM in Manchester on May 17.
The damning 184-page report seeks to win over traditionalists "stuck in denial" over the need for change after regional membership boards and independent societies voiced opposition to his interim proposals in March.
Lord Myners argues the Co-op is "not fit for purpose" Lord Myners later quit as a Co-op director after just four months.
The review followed a tide of pain for the Group, which recently revealed an annual loss of £2.5bn - the bulk of that being put down to the continuing problems at the Co-op Bank now in the clutches of US hedge funds after its rescue from a near collapse.
Lord Myners said: "I have no doubt that the Co-operative Group can over the next five years reverse a decline that started over 50 years ago. But I am less confident that it will choose to do so.
"Much will depend on the small number of 'elected democrats', less than one in 10,000 of the group's entire membership.
"Will they put their self-interest to one side for the greater good, acknowledging the collective failure of the current board and the crippling deficiencies of the entire governance system?
"I would say that the Group board and many on the regional boards are still stuck in denial over this near ruinous failure of governance, whereas the vast majority of ordinary members feel justified anger."
Lord Myners said the resistance from traditionalists reflected a culture of entitlement within a small but highly active proportion of the membership.
He added: "This has undoubtedly created strong vested interests and a reluctance to rethink existing ways of doing things.
"I have myself witnessed repeated instances where there has been denial of responsibility, corrosive suspicion, deliberate delay and a practice of hiding behind 'values' in order to deflect or stifle criticism and protect self-interest."
He slammed the fact that the 15 lay directors on the current board were drawn from a total eligible pool of only 35 regional board members including an engineer, a plasterer and a retired deputy head teacher.
He said that apart from the lack of relevant skills and experience "this has not even been genuine democracy at work".
Ursula Lidbetter, Chair of The Co-operative Group, responded: "The Co-operative Group welcomes the report from Lord Myners and we are grateful to him and his team for producing such a detailed and comprehensive review so rapidly.
"The Board of the Group has made clear its commitment to far-reaching and fundamental reform of our governance.
"A resolution containing four key principles on reform is being put to members at a General Meeting in May and we will build from there to ensure we put the right changes in place".
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