Corporate Travel Management directors and auditor face potential legal threats after clients ‘overcharged by millions’
Corporate Travel Management’s $162m overcharging scandal has opened up the ASX-listed company to possible legal threats, with company directors and auditor at risk of penalties.
Litigation funders are examining the Corporate Travel Management overcharging scandal, with any legal claim likely to involve allegations of misleading or deceptive conduct, and potentially breaches of continuous disclosure rules.
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.
Chief executive officer and CTM founder Jamie Pherous has refused to step down amid the news, and 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.
PwC failed to spot revenue errors in the company’s accounts, but they were picked up by new auditor Deloitte and investigated by KPMG, prompting the withdrawal of 2025 financial guidance released in May.
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.
“If there is to be a claim, it is likely to be in respect of financial statements across a number of prior reporting periods,” Mr Woodhouse told The Australian.
“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,” he 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.
“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.”
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 said.
CTM has been contacted for comment.
The listed travel company stood down its UK executive Michael Healy after revelations about the travel booking company’s accounts, while Mr Pherous has refused to step away.
The board is led by chairman Ewen Crouch, with directors Sophie Mitchell, Marissa Peterson and Jonathan Brett.
PwC – CTM’s auditor of 14 years – could also be hit with a claim, on the basis of “that auditor having signed off the accounts as having presented a true and fair view of the financial position of the company”, Mr Woodhouse said.
“That claim is again likely to be framed as a claim for misleading or deceptive conduct, and may also be put as a claim in negligence,” he said.
“If there is a restatement of the financial accounts for prior periods, then the nature of the restatement is likely to be on the basis that there is an error in the prior period accounts. It is difficult to say that the accounts weren’t misleading if you subsequently acknowledge that they contained an error.”
Any class action will be on behalf of shareholders, Mr Woodhouse said.
“The allegations are likely to be that, for a series of reporting periods, the financial information that was released to the market was incorrect and that purchasers of shares across that period will have been impacted by an inflated share price on account of the misinformation in the market,” he said.
CTM could also be facing legal consequences in the UK, relating to client contracts Mr Woodhouse said.
“I obviously haven’t seen CTM’s contracts with its customers, but I assume that if what’s happened is overcharging then that’s a breach of those contracts,” he said.
There may also be breaches to consumer laws in Australia and the UK, including section 18 of the Australian Consumer Law and potentially section 226 of the UK Digital Markets, Competition and Consumer Act.
A second legal source from a large Australian law firm agreed CTM could be facing breach of contract claims with its customers in the UK, “whether there is any more to it than that will depend upon whether the overcharging was intentional”, they said.
Further, “given the scale of the problem, it seems likely that there would at least be an investigation by (the Australian Securities & Investments Commission) here on continuous disclosure”, the source said.
As well, they concurred “overcharging” clients is likely to also result in a claim of misleading or deceptive conduct, they said.
The Australian Competition and Consumer Commission may also take an interest, particularly if consumers are affected.
“In that case, it could be alleged that the conduct was misleading or deceptive or unconscionable in breach of the Australian Consumer Law – in similar ways to the Qantas ghost flights matter – and the company could face regulatory penalties,” they said.
“We don’t know what the auditors were told by the company but if the auditors failed in their duties to properly conduct the audit, they could face action by the Company Auditors Disciplinary Board as well as from their relevant professional body – CPA Australia or Chartered Accountants ANZ.”
Originally published as Corporate Travel Management directors and auditor face potential legal threats after clients ‘overcharged by millions’
Myer Centre’s $200m sale hangs in the balance
