Thomas Cook bosses to face MPs as committee examines collapse

The Business, Energy and Industrial Strategy Committee wants to call on former executives, auditors and directors to probe how the travel firm failed.

Press Association
Last updated: 26 September 2019 - 8.01pm

Former executives of Thomas Cook are set to be dragged in front of MPs after a group of influential politicians launched an inquiry into the collapse of the travel business.

The Business, Energy and Industrial Strategy (BEIS) Committee said it plans to question former chief executive Peter Fankhauser and other board members over their stewardship of the firm.

Chairwoman Rachel Reeves MP has also written to the Business Secretary Andrea Leadsom to raise concerns about the “slow progress of audit reform”.

Peter Fankhauser
Peter Fankhauser was the chief executive of Thomas Cook at the time of its collapse (Thomas Cook/PA)

She added that the committee will focus on bosses’ bonuses, accounting practices and the role of auditors, along with the impact of the collapse on small firms and suppliers.

Ms Reeves 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 payouts 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.”

Questions have been raised over the accounting practices at Thomas Cook since its collapse on Monday. Auditors at EY had already warned bosses they were claiming too many business costs were “one off” in a bid to show higher profits.

Firms are allowed to exclude one-off costs when reporting profits – these are known as “underlying” profits – but Thomas Cook is accused of placing regular costs in the “one-off” column.

  • The management, governance and stewardship of Thomas Cook Group plc
  • The remuneration policy and practice of Thomas Cook Group plc
  • The accounting practices of Thomas Cook Group plc and the audits conducted by PwC and EY
  • The role of regulators such as the Financial Reporting Council and Insolvency Service following Thomas Cook Group plc’s collapse
  • The impact of the collapse of Thomas Cook Group plc on small businesses and suppliers, and the support available

Sources close to Thomas Cook said: “Directors will welcome the opportunity to set the record straight and demonstrate that their conduct was always in the best interests of Thomas Cook’s customers, employees and stakeholders.”

The Financial Reporting Council (FRC), the accountancy profession watchdog, has already said it will look into whether to launch an investigation.

Ms Leadsom has also written to the Insolvency Service, reminding it of its duty to report anything untoward and to investigate the collapse as a priority.

Meanwhile, the first meeting of the national taskforce for Thomas Cook met on Thursday to discuss support for former employees.

Co-chaired by Ms Leadsom and Work and Pensions Secretary Therese Coffey, it will “meet on a weekly or bi-weekly basis initially and will consider support available for employees looking for new opportunities, for apprentices looking to continue their training, for employees returning from abroad, and for individuals and families needing access to benefits”, BEIS said.

The department added: “It will also review recovery for local communities including Peterborough, where the firm has its retail headquarters and Greater Manchester, where many employees were based, exploring backing for local businesses and high streets through discussions with local growth hubs and authorities.”

Thomas Cook aircraft
Thomas Cook aircraft parked up at Manchester Airport following the tour operator’s collapse (Peter Byrne/PA)

Mr Fankhauser pocketed £8.3 million in pay and perks between 2014 and 2018 – including a mammoth £2.9 million shares bonus in 2015.

Between them, top executives shared more than £16 million in pay, benefits and bonuses over the past five years while the group’s profits were in sharp decline.

But £4.1 million of Mr Fankhauser’s pay was in shares, which are now worthless.

The BEIS committee said it will approach the chairs of Thomas Cook’s remuneration and audit committees, who sign off the accounts and decide pay levels for executives, with hearings planned for next month.

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