The Serious Fraud Office (SFO) is understood to be “very interested” in the business dealings of E-Clear, the credit card processing firm forced into
administration this week.

On Tuesday PricewaterhouseCoopers (PwC), administrator of failed Scottish operator Globespan, was granted a High Court application to appoint BDO as administrator of E-Clear.

The under-fire credit card intermediary admitted to having virtually no money in its bank accounts to pay back the £35 million PwC claimed it owed Globespan.

E-Clear had been given until Friday to prove it had the £35 million after judge Justice Floyd ordered the company to provide bank statements to prove whether it had the funds.

A late submission at 5pm on Monday revealed it had €10 million held for German card processing firm Pago. Personal bank accounts of chief executive Elias Elia were empty and the firm had only Can$130,000 deposited in another account.

A well placed source told Travel Weekly that BDO was contacted by the SFO, the independent government department that investigates and prosecutes serious or complex fraud, on Tuesday. This coincided with the administrators’ first meeting with Elia at E-Clear’s Mayfair offices.

Under investigation is where an estimated £80 million it owed to its clients is.

The source said if it can be proved the money has been invested in other interests it should be a matter for the authorities.

But there would be no wrongdoing if it was used to plug holes in E-Clear’s finances, which were likely to have been hit by the recent collapses of major clients including XL Leisure Group, Sky Europe and Zoom.

On top of the £35 million Globespan debt, sources said E-Clear also owed Canadian operator Sunwing Can$70 million (about £50 million), a sum Travel Weekly was told it tried unsuccessfully to recoup through the Canadian courts.

Sunwing, which put the final touches to a strategic alliance with TUI Travel last week, is thought to be chasing German Deutsche Bank, a 50% owner of Pago, for the money.

Tuesday’s hearing at the High Court in London was not attended by anyone from E-Clear or its legal team and the application was not challenged by the company. 

Speaking to Travel Weekly after the half-hour hearing, Ian Oakley-Smith, PwC administrator for Globespan, said: “Clearly there are a number of questions that need to be answered: first and foremost, where is the money?”

An E-Clear spokesman insisted the firm was paying out to Globespan customers at a rate of £1 million a day through money held in a trust
account, but would not comment further.

What happens next?

BDO will look into the finances of E-Clear, which could lead to an official investigation by the Serious Fraud Office.

E-Clear might be quickly liquidated, leaving creditors out of pocket and raising the question: who will pay for an investigation into its business dealings?

A deal could be struck between government and the administrators of E-Clear and Globespan to fund the investigation.

Questions will be asked about why E-Clear was not regulated, and why Visa and Mastercard allowed it to operate in a way PwC said was “not generally permitted
under their rules”.

Deutsche Bank, as the financial institution that through its part-owned Pago arm, backed much of E-Clear’s business, will be chased for the money owed to creditors.