Thomas Cook bosses face grilling by MPs over ‘aggressive’ accounting

Former Thomas Cook executives face questioning by MPs over the failure of the travel giant with debts of £1.7 billion.

The Commons business, energy and industrial strategy committee will seek to question chief executive Peter Fankhauser as well as its chairman, finance director and auditors.

The inquiry will focus on the company’s “aggressive” accounting practices, executive pay, and the role of its auditors as costs from the fallout look set to reach nearly £1 billion.

It is also likely to examine the impact on small businesses and suppliers of the collapse of Thomas Cook.

The government has said that the cost of refunding future bookings under the Atol scheme will be around £420 million, in addition to £338 million owed to hoteliers and an estimated £100 million bill for chartering aircraft to repatriate Thomas Cook customers to the UK, according government figures.

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In its most recent accounts, the Air Travel Trust, reported net assets of £170 million and a £400 million insurance policy, making a total of £570 million that it could be called on, according to the Financial Times.

The Civil Aviation Authority has denied that Atol would need to call on taxpayers,  saying that it had a healthy insurance back-up and could use a loan facility to meet any Thomas Cook payments, The Times reported.

The collapse of Thomas Cook on Monday, after it failed to secure a £900 million rescue deal, has prompted numerous probes and investigations amid accusations of poor governance and questionable accounting practices.

The Insolvency Service has launched an investigation into the company’s management, and the Financial Reporting Council said it was reviewing “as a matter of urgency” whether to join that probe.

The business, energy and industrial strategy committee expects evidence hearings to begin in mid-to-late October, with specific dates and timings to be announced in due course.

A deadline of October 10 has been set for evidence to be submitted.

Committee chairwoman, Labour MP Rachel Reeves MP, said: “Amid the frustration of holidaymakers and the misery of thousands of staff losing their jobs, the collapse of Thomas Cook has uncovered what appears to be a sorry tale of corporate greed, raising serious questions about the actions of Thomas Cook’s bosses and their stewardship of the business.

“This latest corporate failure has shone a light once again on the use of aggressive accounting methods to aid bumper pay-outs to company executives and the apparent inability of auditors and regulators to curb these practices in the wider interests of shareholders, investors, and the public.

“The BEIS Committee has a long-standing interest in corporate governance, executive pay, and audit reform which we are keen to follow up in this inquiry.

“The main players in the sad demise of Britain’s oldest travel firm should face public scrutiny and be held to account for their actions before the company collapsed.”

Transport Salaried Staffs’ Association general secretary Manuel Cortes said: “There are still some very serious questions the government needs to answer and soon.

“I expect the committee will wish to look into this matter because I am not satisfied that what the government is saying is at all credible.

“For example – why would a private company like Fosun be prepared to put £450 million into a company which had no future? I have had no reasonable response from ministers on this point.

“I’m calling on the committee to bring ministers before them so we can get answers as to why, as has been widely reported, the Turkish and Spanish governments were prepared to make substantial investments to support Thomas Cook but the British government refused to allow that to happen.

“Of course, most recently the German government provided €350 million to save Thomas Cook’s subsidiary – Condor – as our government simply sat on its hands.

The Civil Aviation Authority said today it had flown home about 61,000 holidaymakers, or about 40% of the total of 150,000, in the first four days of its Operation Matterhorn rescue effort.

A further 72 flights are scheduled to operate today (Friday) to bring back around a further 16,000 people.

CAA chief executive Richard Moriarty said: “Despite the challenges of this unprecedented situation, I am pleased that our Operation Matterhorn is on track with around 61,000 people flown home in the first four days – over 40% of the total.

“Around 95% of people have flown home on their original date of departure at the end of their holiday.

“An operation of this scale and complexity will inevitably cause some inconvenience and disruption and I am very grateful to holidaymakers for bearing with us as we work around the clock to bring them home.”

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