The head of the travel trade’s fraud prevention group has written to Visa and Mastercard bosses to demand they explain why payment processing firm E-Clear was allowed to withhold funds from clients.
The move came as E-Clear administrators BDO submitted a report to creditors detailing progress to date of its investigation into the firm and revealing E-Clear boss Elias Elia’s passion for luxury cars.
He owned a Rolls-Royce Phantom, a Ferrari F430 Spider, a Mercedes and a Range Rover, three of which were paid for with a loan taken out against the company.
Elia has denied any wrongdoing and neither he nor E-Clear have been subject to any formal investigation.
However, Barry Gooch, chairman of the Prevention of Fraud in Travel Group, said it was “disgusting” that the company had not yet been investigated.
E-Clear was forced into administration by the High Court in January after evidence was presented by PricewaterhouseCoopers, the administrator of Globespan, that it had virtually no money.
The Serious Fraud Office (SFO) said in January it was “very interested” in E-Clear’s business dealings, but it has not committed to a full investigation.
Gooch has repeatedly written to the SFO asking for a decision and this week wrote to Visa chief executive Peter Ayliffe and Mastercard president Javier Perez asking them to look into the matter.
“Someone has to make sure this is investigated,” he said.
In the creditors’ report, BDO said it had been notified of £82 million worth of claims, including £46.7 million to Canadian firm Sunwing and £4.4 million to SkyEurope. It is thought Globespan was owed £35 million, although it is yet to file a claim.
The report said although it was industry practice for processing firms to retain funds for a short period, E-Clear “started to hold funds for increasingly longer periods following the collapse of Zoom and XL [two other clients] to cover the cash flow shortfall created by chargebacks”.
BDO proposed that it continues to realise the firm’s assets and to then make payments to creditors owed £60,000 or more before liquidating the company. Creditors will be asked to approve these proposals at a meeting on March 24.