The small-town mayor, the ‘deathtrap’ barge and the Aussie company’s $3.2 billion black hole

If the mayor of an English coastal town wins her legal battle, which went before the UK High Court last week, it could put an end to ASX-listed Corporate Travel Management’s controversial role in Britain’s hardline immigration policy.

The mayor of Portland in Dorset in the UK, Carralyn Parkes, has challenged the British Home Office’s right to park an accommodation barge, the Bibby Stockholm, in Portland Harbour – a practice designed to cut the costs of accommodating migrants in hotels, which was running to millions of pounds a day.

Accommodating asylum seekers on barges like the Bibby Stockholm was part of British Prime Minister Rishi Sunak’s “Stop the Boats” policy. Credit: Getty

“I believe housing vulnerable people on a barge is inhumane; human beings belong in communities where they can be taken care of properly,” Parkes said when launching her legal challenge last year.

The controversy has effectively killed the two-year £1.6 billion ($3.2 billion) contract Corporate Travel announced in April last year to manage the facility, with no reference to asylum seekers.

Last month, the travel group’s founder and chief executive, Jamie Pherous, admitted it might not make any money out of the controversial deal, which has become a flashpoint for Prime Minister Rishi Sunak’s “Stop the Boats” policy.

“In a perfect world, we would all assume we’d have a dozen cruise ships going by now, but right now, that’s not very acceptable politically, as you can see from what’s happened in the last six months,” Pherous said with the release of its half-year results.

A significant downgrade of its earnings, due in part to the failure of the UK contract, triggered a 20 per cent share price plunge that day.

The Bibby Stockholm, which had its accommodation capacity doubled to more than 500 people with the installation of bunk beds, has been labelled a “deathtrap” by the UK’s Fire Brigades Union.

The barge had to be evacuated last August, less than a week after the first asylum seekers boarded, following the discovery of legionella bacteria in its water system.

The Bibby Stockholm, an accommodation barge, was meant to be the first of many housing asylum seekers.Credit: POOL PA

Diana Johnson, chair of the Home Affairs Select Committee, which visited the Bibby Stockholm in late January following the death of an asylum seeker on board, criticised the living conditions, including instances of up to six people being accommodated in rooms designed for one person.

“These crowded conditions were clearly contributing to a decline in mental health for some of the residents, and they could amount to violations of the human rights of asylum seekers,” she said.

‘Reputational impacts’

Corporate Travel had been warned that the contract could be problematic.

The Australian Council of Superannuation Investors (ACSI) head of stewardship, Ed John, reiterated concerns he first expressed to the ABC’s 7.30 Report last year.

“This new area of operation comes with some very significant human rights and regulatory risks. And any incident could have pretty significant human impact as well as brand and reputational impacts on the company, which is a concern for shareholders,” he said.

This is not the only crisis contract that Corporate Travel has won. Pherous told analysts and investors that it had completed 23 crisis and humanitarian contracts over the past three years.

Citi analyst Samuel Seow was also among those critical of the deal.

“In hindsight, the contract has been troublesome, with the stock re-rating down on higher asylum [ESG risk] earnings, and re-rating down again as the earnings reduced,” he said.

Morningstar’s Brian Han said that while the events in the UK were outside the company’s control, “it dents management’s credibility in assessing the types of crisis and humanitarian projects”.

Wilson Asset Management’s Oscar Oberg, which owns shares in the travel group, said it did not have any issue with Corporate Travel getting into this sort of business “but we do understand other investors did.”

He pointed out that the group does a lot of work with the UK government and needs to maintain a good relationship.

“I don’t think it’s as simple as them to say, ‘We’re not going to do this any more’,” he said.

The importance of that relationship was underlined the day after Corporate Travel’s half-year results when a fresh contract surfaced with a value of £100 million ($194 million).

That contract is more traditional for the group – managing travel and accommodation for the UK’s Department for the Environment, Food and Rural Affairs for the next three years.

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