Updated ,first published
The founder of the embattled Corporate Travel Management, Jamie Pherous, has stepped down with immediate effect as an independent audit commences into its lucrative Australian government business to determine if it is among the clients overcharged by the group.
The company’s shares remain suspended as CTM works to restate its financial accounts going back years and determine if it overcharged clients, including the British government, more than the $160 million it has uncovered to date.
The Australian government is one of CTM’s most important customers after CTM was awarded all of the federal government’s travel and accommodation business in 2023 for at least four years.
CTM at the time said the contract would generate 20 per cent of its revenue for the 2024 financial year alone.
At Senate estimates last December, after the full scale of the scandal was revealed, Andrew Danks, first assistant secretary for procurement at the Department of Finance, confirmed that CTM had offered to fund an independent audit. This was declined.
“(We) said that we will commission that audit and we will pay for it to make sure that it is truly independent,” he told Senate estimates.
An update is expected this month on the timeframe for the audit, but CTM acting chief executive Ana Pedersen said on Monday: “It’s been made public what the Australian government is intending on doing, and we’re working very closely with them, and that process will commence very shortly.”
That deal to manage Australian government travel has not been implicated in the overcharging scandal and there is no suggestion Pherous was involved in the broader issues.
CTM had a market valuation of $2.35 billion when shares last traded, but some analysts have halved their value of the stock and one investor has written off its valuation entirely.
CTM told the ASX on Monday morning that Pherous would retire as chief executive and board member. Chief commercial officer Pedersen would act as chief executive of the travel agency until a permanent replacement is found.
Pherous, also the group’s second-largest shareholder, will move to an “advisory role” under a six-month consulting agreement with the company.
Chairman Ewen Crouch said the board had determined now was the “appropriate time to accelerate the transition to a refreshed corporate structure”, while acknowledging the problems the company had faced.
Crouch acknowledged the need for change given the scale of the scandal, which will cost investors dearly, but he avoided laying any blame at the feet of the charismatic CTM founder, who started the business more than three decades ago.
“We recognise his impact, but as a board, we must also focus on the evolution of the business,” Crouch said of Pherous.
“Clearly, we have let shareholders down over recent months. We understand that, and we’ve heard first-hand their deep frustration. It’s important that we learn from these events and create a strong and sustainable structure that can help us restore trust in the business.”
Crouch would not speculate on whether CTM would be in a position to release its 2025 financial year accounts before the current financial year ends on June 30.
“There is confidence that we will complete the process to enable the company to relist. I cannot give you a specific date,” Crouch said.
CTM shares have been suspended for months, after the company last year flagged minor accounting issues that then ballooned into massively overcharging the British government for services including housing asylum seekers on large-scale barges, including the controversial Bibby Stockholm.
The company had previously told the ASX that these asylum seeker contracts would be worth $3 billion over several years, but the controversy over asylum seekers in Britain, and a change of government, led to abrupt changes to the deal.
CTM’s woes have raised concerns that it had been charging too much to house the asylum seekers in hotels across Britain under contracts arranged by the former Conservative government. According to British reports, CTM has won £3.9 billion ($7.7 billion) in public sector contracts over the past decade.
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Colin Kruger is a senior business reporter for the Sydney Morning Herald and The Age.Connect via email.