Regulators and MPs were considering investigations into Thomas Cook’s auditors and directors as the fallout from the travel firm’s collapse continued on Tuesday, with thousands of staff and suppliers facing uncertain futures and more than 100,000 holidaymakers still due to be brought home on government rescue flights.
Britain’s accountancy regulator, the Financial Reporting Council (FRC), said it was considering the case for investigation and enforcement action “as a matter of urgency”, while MPs on the business select committee said there were “serious questions to answer” about how the firm was run.
The government has already announced a fast-track inquiry into the collapse by the Insolvency Service, which is charged with closing down the 178-year-old holiday business.
Potential concerns for the FRC include the extent of “exceptional items” on the company’s balance sheet, which could have swayed investors and affected annual results – as well as the profit-related bonuses paid to directors.
Thomas Cook was audited by two of the UK’s biggest accountancy firms, with EY succeeding PwC from 2017. The tour operator had a series of finance chiefs over the past two years.
The pay of the last three chief executives of Thomas Cook has come under increased scrutiny.
Labour’s John McDonnell has urged the former bosses to repay their bonuses while the Confederation of British Industry said “questions are now rightly being asked” about the £35m paid out over the past 12 years to Manny Fontenla-Novoa, Harriet Green and Peter Fankhauser.
The business secretary, Andrea Leadsom, defended the government’s refusal to help bail out the company, insisting that it would have been “a waste of taxpayers’ money”.
She would not comment on claims that the UK had refused to back a financial lifeline tabled by Spanish hoteliers and the Turkish government.
She said only that there were “all sorts of rumours” but insisted that £200m was an underestimate of what the company needed to survive.
A Department for Transport spokesperson later said: “We do not recognise the details of this proposed solution. At no point was a deal presented.”
Thomas Cook had pinned its survival hopes on a restructuring that would have wiped out £1.7bn of existing debts and injected an extra £900m, half from the Chinese tourism business Fosun. The Chinese company would have taken control of the firm. Demands from banks for an extra £200m pushed the firm over the edge.
The business select committee said it wanted answers about the collapse. Its chair, Rachel Reeves MP, said: “There are serious questions to answer, including about the company’s accounting practices, its remuneration policy and practice, and about the stewardship of the company.”
Leadsom asked banks and credit card firms to give consideration to redundant Thomas Cook staff who may struggle with bills while awaiting redundancy payments.
About 645 of them are now working for the Insolvency Service at the defunct group’s Peterborough headquarters, assisting with Operation Matterhorn, the temporary airline set up by the Civil Aviation Authority (CAA) to bring home stranded holidaymakers.
The CAA was due to bring 16,800 Thomas Cook customers back to the UK on Tuesday on 74 rescue flights. It repatriated 14,700 passengers on Monday, about 95% of whom had been due to fly that day.
Many flights have been combined, with passengers flown in on larger jets and then taken to their destinations by bus. A Malaysian Airlines A380 superjumbo was flying between Mallorca and Manchester, carrying passengers also due to travel to Birmingham, Gatwick and Newcastle.
Some holidaymakers reported continued confusion, including demands for payment from hoteliers fearful of not being paid, despite the CAA’s guarantees to pay for rooms under the Atol protection scheme.
Customers who had booked with Thomas Cook but are yet to travel will get full refunds, but the prices of alternative trips will probably be much higher.
Many flight and holiday prices have soared, prompting outrage on social media at BA, Jet2, Ryanair and Virgin among others. The cheapest direct return flights to destinations such as Crete and Tenerife are now almost £600 for a range of dates in October.