Thomas Cook execs to be dragged in front of MPs as government sets up taskforce to support travel giant’s former workers
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.
Chair Rachel Reeves has also written to the Business Secretary Andrea Leadsom to raise concerns about the “slow progress of audit reform”.
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.”
The MP’s comments come as a taskforce to support Thomas Cook workers who lost their jobs after the firm’s collapse - as well as support affected local economies - met for the first time.
Thomas Cook’s head office is at Lynch Wood in Peterborough and more than 1,000 people working for the company in the city are now unemployed.
It is feared that the wider ramifications could see 3,000 city jobs affected due to the travel giant’s links with suppliers.
Some staff remain at Lynch Wood after being paid by the Civil Aviation Authority to carry out the largest repatriation since the Second World War.
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 over-using “one off” payments on the balance sheet to inflate 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.
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.
Mr Fankhauser pocketed £8.3 million in pay and perks between 2014 and 2018 - including a £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.
North West Cambridgeshire Shailesh Vara, whose constituency includes Lynch Wood, joined the first meeting of the national Thomas Cook Taskforce which is being chaired by Ms Leadsom and the Secretary of State for the Department for Work and Pensions, Therese Coffey.
The multi-disciplinary team is made up of government ministers, MPs, Government officials, trade union representatives, administrators and local government representatives.
The focus of the taskforce is to ensure support for employees and local economies most affected by the liquidation, with a view to minimising impact and promoting recovery.
The meetings will continue to take place on a weekly or bi-weekly basis for the time being.
Mr Vara said: “It has been a very difficult few days for the many local people affected by the collapse of Thomas Cook.
“I am very pleased that a national taskforce has been established and is co-chaired by two Cabinet ministers, which reflects the importance of the matter to the Government.
“The focus of everyone in attendance was clear - ensuring local people and their families get all the support available to them as quickly as possible.”
MP for Peterborough Lisa Forbes was also present.
She said: “Today I joined the taskforce in Parliament to discuss how we can support those affected by the collapse of Thomas Cook. I will ensure constituents are updated with developments and future meetings.
“There will be a recruitment event for those affected by the collapse of Thomas Cook next Wednesday at 9.30am at the Town Hall.