Travel Empire Founder Resigns Amid $150M Overcharging Scandal
Jamie Pherous, the founder of Corporate Travel Management based in Brisbane, has resigned amid a significant overcharging scandal in the UK. This controversy may involve more than $150 million in improper billing. His resignation, announced on Monday, has led to the suspension of shares in the $2.3 billion company, which manages travel bookings for clients such as the Australian government and Wesfarmers.
Departure Highlights Financial Turmoil
The company’s board described the departure of Pherous as mutual, raising concerns among investors about the company’s ongoing troubles. Mark Wade, an independent equity analyst, noted that this shakeup suggests deeper issues within the business that lack a quick resolution.
- Pherous founded Corporate Travel Management in 1994 with only two employees.
- He drew inspiration from his experience at Arthur Andersen, where he struggled with travel arrangements.
- The company was listed on the ASX in 2010 and expanded globally.
Financial Background and Lifestyle
Pherous has previously sold stock worth over $140 million, financing a lavish lifestyle that included high-profile events such as hiring musician Jimmy Barnes for his birthday party. His assets included multimillion-dollar properties and significant donations to his alma mater.
As of August, Pherous held about 16.5 million shares, valued around $266 million at the time. Following his resignation, he will serve as a consultant for six months while earning a fixed annual salary of $675,000.
Company’s Governance and Future Directions
Corporate Travel’s chairman, Ewen Crouch, characterized the resignation as part of a mutual agreement aimed at strengthening the company’s governance. This decision follows months of unrest among shareholders whose investments have stagnated for over six months.
- Pherous stated his retirement allows new leadership to refocus on the company’s future.
- Despite stepping back, he maintains an 11.3% stake in Corporate Travel, ensuring his interest in its success.
Ongoing Investigations and Financial Implications
Corporate Travel is under scrutiny for potential accounting discrepancies, with new auditors Deloitte uncovering issues. The company initially claimed that the overbilling would not impact cash flow, but later revealed it needed to revise revenues recorded in the UK for multiple financial years, including £58.2 million ($114 million) planned for 2023 and 2024.
The UK Home Office has confirmed an investigation into the alleged overcharging, particularly concerning contracts involving asylum-seeker accommodations. Ana Pedersen, the chief commercial officer, is now the acting chief executive, with an annual salary of $1 million.
Market Reaction and Future Outlook
UBS analysts noted that Pedersen’s experience could benefit the company as it seeks to resolve its financial challenges. Corporate Travel’s stock was previously valued at $150 million, but that figure was reduced amid the scandal, which has seen investors mark down their shares significantly.
The outcome of this turmoil remains uncertain, with analysts calling for clarity regarding the company’s financial position and whether it can resume trading soon. Investors are left facing a murky future, as Corporate Travel aims to restore credibility in the marketplace.
