Scathing report on failings that brought Thomas Cook down
Published on Tuesday, November 5, 2019
MPs have concluded that a series of misjudgements caused Thomas Cook’s demise, laying the blame firmly at the management’s door.
But the inquiry by the Business, Energy and Industrial Strategy Committee also noted the ‘extraordinary lack of interest’ shown by the Government’s Business Department and its Secretary of State in the days and weeks leading up to the collapse.
“Our inquiry has been cut short by the election but it’s clear that a series of misjudgements at Thomas Cook led to its collapse,” said the committee’s chair Rachel Reeves.
“The piling up of debt, confused business plans, lack of challenge in the board room and by auditors, and aggressive accounting practices all contributed to the failure of the business.
“During our inquiry, we’ve witnessed buck-passing and blame-shifting but precious little humility or reflection from those at the top of the business. Directors and senior management pocketed hefty sums in annual salaries and bonuses that Thomas Cook staff will only have dreamed of earning throughout their entire careers.
“Mr Fankhauser told us he would reflect on the huge salaries he has earned. Given the riches which Thomas Cook poured into his pockets I hope that Mr Fankhauser will realise that now is the time to put right the wrong he has done.
“Manny Fontenla-Novoa offered apologies but appeared unable to identify any single thing he would have done differently during his time stacking up debt at Thomas Cook.
“The circumstances of Harriet Green’s departure remain unclear but her vision of the business would likely have seen fewer stores and fewer staff. We will never know whether it might have rescued the business.
“There was a lack of challenge in the boardroom as the company piled up debt and Thomas Cook management missed opportunities to reduce debt levels and give the business a viable future. Huge financing costs hamstrung attempts to invest in the business. The final collapse of the business resulted in misery and uncertainty for staff and customers, and brought a significant hit to the taxpayer.
“The failure at Thomas Cook has been also been notable for the extraordinary lack of interest shown by the Business Department and its Secretary of State in the days and weeks leading up to the collapse. It is also a matter of fact that many of the necessary measures on audit, on executive pay, and on corporate governance have been sitting in the Government’s in-tray for months.”