The Corporate Travel Management (CTM) saga continues this week as litigation funders begin to examine the scandal after a financial review revealed the business had overcharged customers around AU$162 million.
Chief executive officer and CTM founder Jamie Pherous has refused to step down amid the news, however last week the travel company suspended its UK executive Michael Healy after the overcharging revelations. CTM remains under intense pressure after Britain’s Cabinet Office revealed it is investigating the matter and the Greater London Authority is reviewing its contracts with the company.
Litigation funders and plaintiff law firms are already examining the scandal and will be looking to see if prior periods contained errors and if that should have been disclosed to the market earlier, Clifford Chance partner and head of class actions Brad Woodhouse told The Australian. Any legal claim is likely to involve allegations of misleading or deceptive conduct, and potentially breaches of continuous disclosure rules.
“If there is to be a claim, it is likely to be in respect of financial statements across a number of prior reporting periods,” Woodhouse said.
“It’s highly likely that any claim against CTM would involve allegations that the accounts released to the market, both on a half yearly and on an annual basis, contained material errors and that … CTM’s accounts did not present a true and fair view of the company’s financial position,” Woodhouse said.
“Any claim is likely to involve allegations that the company has engaged in misleading or deceptive conduct in breach of … the Corporations Act and ASIC Act. There may also be allegations of contraventions of CTM’s continuous disclosure obligations.”
CTM’s directors and former long-time auditor PricewaterhouseCoopers may also face a claim, after the ASX-listed company revealed it overcharged customers in the UK by about $162m between 2021 and 2023.
“It may well be that the claim is also put against the company’s directors or at least some of them given their role in connection with the preparation and finalisation of the company’s financial statements,” Woodhouse added.
There may be contraventions of financial services licences, and at the most extreme end of the spectrum there may be fraud claims, a legal source told The Australian.
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Full impact of CTM UK CEO’s suspension over $162m in overcharges yet to be felt
