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You can find the current article at its original source at https://www.theguardian.com/business/live/2019/oct/15/thomas-cook-mps-parliamentary-grilling-collapse-bank-of-england-imf-pound-business-live
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MPs blast Thomas Cook bosses' rewards for failures, and demand bonus clawbacks – business live | |
(32 minutes later) | |
Rachel Reeves has spoken to Sky’s Paul Kelso outside Portcullis House, and repeated her call for Thomas Cook’s board to hand back some of their pay. | |
Fresh from the Committee hearing @RachelReevesMP tells @pkelso that #ThomasCook’s board “have got to take some responsibility... hold their hands up and give some of their money back”. pic.twitter.com/EDAFOFuQVA | |
Peter Fankhauser faced fresh questions about his bonuses as he left today’s hearing, from journalists waiting outside Portcullis House in Westminster. | |
Thomas Cook’s former CEO didn’t say much new, beyond repeating that he won’t make any decision today on whether to hand back some of his pay, before being pursued into a waiting taxi in a flurry of microphones, TV cameras and snappers. | |
NEW: I tried to ask former Thomas Cook CEO Peter Fankhauser if he would give back the £500,000 bonus he didn't deserve.Mr Fankhauser said he will "consider what's right but "won't decide today."He says this in front of furious Thomas Cook ex-employees.#ThomasCookcollapse pic.twitter.com/9LNLifTIvA | |
BALPA, the pilots’ union, has criticised Peter Fankhauser and crew for their performance before the BEIS committee today. | |
BALPA General Secretary, Brian Strutton, says: | |
“It is right that those at the top of Thomas Cook are held to account for the company’s collapse. Sadly, today, in response to excellent questioning by the committee, we heard lots of obfuscation, and precious little remorse from executives. | |
“We also place significant blame with the UK Government who could have backed a temporary bridging facility to keep this company going, saving the thousands of jobs which have been lost. | |
“We continue to support Thomas Cook pilots in finding new work but the scars of this collapse will no doubt run deep with them for many years to come.” | |
It is right that those at the top of Thomas Cook are held to account for the company’s collapse. Sadly, today, in response to excellent questioning by @CommonsBEIS , we heard lots of obfuscation, and precious little remorse from executives.https://t.co/41XMBJUuPH | |
Here’s The Times’ take on the Thomas Cook hearing: | |
Bosses of Thomas Cook were “rewarded for failure” after attempting to hide the true scale of the company’s losses as it teetered on the brink of collapse, MPs said today. | |
Members of the tour giant’s board were strongly criticised today as they were hauled before MPs for the first time since the 178-year-old firm was placed in compulsory liquidation last month. | |
The cross-party business committee accused managers of attempting to effectively massage the books over eight years by withholding £1.8 billion-worth of spending from its headline financial results. | |
Rachel Reeves, the committee’s Labour chairman, said the company’s debts were an “awful lot worse than the figures you were trying to present to the market”, adding that this “all caught up with you in the end”. | |
More here: | |
Thomas Cook managers have been accused by MPs of attempting to effectively massage the books over eight years by withholding £1.8 billion-worth of spending from its underlying balance sheet https://t.co/fRpaHmdQnC | |
Mark Carney added that that some people in the financial markets will make money whichever direction Brexit takes. | Mark Carney added that that some people in the financial markets will make money whichever direction Brexit takes. |
The governor told the Treasury committee (on a busy morning for committees) that: | The governor told the Treasury committee (on a busy morning for committees) that: |
“On no-deal some people will become wealthier as a consequence of that, yes. Others will become poorer - they [winners] will be outnumbered by the number who become poorer.” | “On no-deal some people will become wealthier as a consequence of that, yes. Others will become poorer - they [winners] will be outnumbered by the number who become poorer.” |
And on Facebook’s Libra, Carney said the cryptocurrency is either going to be regulated properly globally “or it’s not going to happen” - and he says he’s confident that will be the view of the G7 and G20 financial stability board. | And on Facebook’s Libra, Carney said the cryptocurrency is either going to be regulated properly globally “or it’s not going to happen” - and he says he’s confident that will be the view of the G7 and G20 financial stability board. |
“This will not be like social media. This will not be a case where something gets up and starts running and then the system tries to figure out after the fact how it’s going to regulate it. | “This will not be like social media. This will not be a case where something gets up and starts running and then the system tries to figure out after the fact how it’s going to regulate it. |
“It’s either going to be regulated properly, overseen properly, or it’s not going to happen.” | “It’s either going to be regulated properly, overseen properly, or it’s not going to happen.” |
While the BEIS committee was eviscerating Thomas Cook’s failures, Bank of England governor Mark Carney was being quizzed about climate change. | While the BEIS committee was eviscerating Thomas Cook’s failures, Bank of England governor Mark Carney was being quizzed about climate change. |
This continued from his comments in our exclusive interview at the weekend. | This continued from his comments in our exclusive interview at the weekend. |
In stark analysis of the world’s financing of carbon-intensive assets, he says the global capital markets - where companies sell their bonds and shares to investors to fund their activities - are on a track to lift the temperature of the planet by more than 4 degrees C above pre-industrial levels. | In stark analysis of the world’s financing of carbon-intensive assets, he says the global capital markets - where companies sell their bonds and shares to investors to fund their activities - are on a track to lift the temperature of the planet by more than 4 degrees C above pre-industrial levels. |
That’s double the target of the Paris climate agreement is to keep temperature rises well below 2c to avert catastrophe. | That’s double the target of the Paris climate agreement is to keep temperature rises well below 2c to avert catastrophe. |
Carney says he based the assessment on fund management firms that have analysed the climate-linked assets in their portfolios, including the massive $1.6tn Japan Pension Fund, which he says holds assets consistent with a 3.7 degrees rise. The fund is attempting to manage that down, he says. | Carney says he based the assessment on fund management firms that have analysed the climate-linked assets in their portfolios, including the massive $1.6tn Japan Pension Fund, which he says holds assets consistent with a 3.7 degrees rise. The fund is attempting to manage that down, he says. |
Axa, another investment manager, prices US government debt at “5.4C”, he says, reflecting the carbon intensive nature of the US economy. The UK is much lower, he says. | Axa, another investment manager, prices US government debt at “5.4C”, he says, reflecting the carbon intensive nature of the US economy. The UK is much lower, he says. |
Some companies are ahead of the game, Carney says, but many others are waiting for policies to change: | Some companies are ahead of the game, Carney says, but many others are waiting for policies to change: |
“Policy is not yet consistent with stabilising temperatures below 2c. There are some companies out ahead, either because of their stakeholders, or because they’re anticipating that that will change. But there are others that are waiting for the policies to adjust” | “Policy is not yet consistent with stabilising temperatures below 2c. There are some companies out ahead, either because of their stakeholders, or because they’re anticipating that that will change. But there are others that are waiting for the policies to adjust” |
Here’s a snap summary of the key points from today’s blistering inquiry: | Here’s a snap summary of the key points from today’s blistering inquiry: |
Takeaways from first hearing of MPs' Thomas Cook inquiry:-- Directors say they proposed a rescue plan costing taxpayers less than the collapse. No10 knew of it. Govt refused.- MPs savage execs for failures including unrealistic accounting.- CEO won't commit to repay bonus. | Takeaways from first hearing of MPs' Thomas Cook inquiry:-- Directors say they proposed a rescue plan costing taxpayers less than the collapse. No10 knew of it. Govt refused.- MPs savage execs for failures including unrealistic accounting.- CEO won't commit to repay bonus. |
Also, MPs were incredulous at the lack of engagement from minister with Thomas Cook in the week leading up to its collapse. | Also, MPs were incredulous at the lack of engagement from minister with Thomas Cook in the week leading up to its collapse. |
Finally, Rachel Reeves MP chastises the former Thomas Cook bosses for their failure to run the company properly, or to show dignity at today’s inquiry. | Finally, Rachel Reeves MP chastises the former Thomas Cook bosses for their failure to run the company properly, or to show dignity at today’s inquiry. |
A travel company is a simple business at heart, the BEIS committee chair says. | A travel company is a simple business at heart, the BEIS committee chair says. |
You send people on holiday, make sure they have a good time, and bring them back. Thomas Cook couldn’t get that right, so it failed - and that failure touched a lot of people a lot harder than it touched the five well-paid executives in front of the committee. | You send people on holiday, make sure they have a good time, and bring them back. Thomas Cook couldn’t get that right, so it failed - and that failure touched a lot of people a lot harder than it touched the five well-paid executives in front of the committee. |
You’ve all given your apologies, Reeves continues. But frankly, as seen time and time again on this committee, apologies are the easy bit. The hard bit is to resign from other other directorships, and recognised you have a lot to learn. | You’ve all given your apologies, Reeves continues. But frankly, as seen time and time again on this committee, apologies are the easy bit. The hard bit is to resign from other other directorships, and recognised you have a lot to learn. |
And... to: | And... to: |
Give back some of the huge rewards that you have not earned, Mr Peter Fankhauser, but you have received. | Give back some of the huge rewards that you have not earned, Mr Peter Fankhauser, but you have received. |
And with a final flourish, she urges Peter Fankhauser, Frank Meysman, Martine Verluyten, Sten Daugaard and Warren Tucker to reflect on the dignity which other Thomas Cook workers have shown, but which the committee has not seen today. | And with a final flourish, she urges Peter Fankhauser, Frank Meysman, Martine Verluyten, Sten Daugaard and Warren Tucker to reflect on the dignity which other Thomas Cook workers have shown, but which the committee has not seen today. |
And with that, they’re dismissed... | And with that, they’re dismissed... |
Rachel Reeves rounds the session up, with a scathing, magisterial dismissal of some of the excuses we’ve heard this morning. | Rachel Reeves rounds the session up, with a scathing, magisterial dismissal of some of the excuses we’ve heard this morning. |
She begins by dismissing former chairman Frank Meysman claim that a “tragedy” occurred one Saturday in September, when Thomas Cook went under. | She begins by dismissing former chairman Frank Meysman claim that a “tragedy” occurred one Saturday in September, when Thomas Cook went under. |
Reeves says: | Reeves says: |
A tragedy, though, speaks of something that is out of your hands. | A tragedy, though, speaks of something that is out of your hands. |
I don’t think this was out of the hands of the company. On the contrary, I would say that that the collapse of Thomas Cook was due to the decisions of the board, including you, Mr Meysman. | I don’t think this was out of the hands of the company. On the contrary, I would say that that the collapse of Thomas Cook was due to the decisions of the board, including you, Mr Meysman. |
Reeves says “a series of misjudgements made by management” led to the inevitable collapse of the world’s oldest travel firm, namely: | Reeves says “a series of misjudgements made by management” led to the inevitable collapse of the world’s oldest travel firm, namely: |
A failure to deal with the debt, not accumulated by Peter Fankhauser, but not dealt with in the five years he was in charge, or under Meysman’s chairmanship | A failure to deal with the debt, not accumulated by Peter Fankhauser, but not dealt with in the five years he was in charge, or under Meysman’s chairmanship |
A failure to write down goodwill. It “can’t be true” that goodwill was worth £2.5bn one minute and £1.5bn the next -- and now worth nothing. | A failure to write down goodwill. It “can’t be true” that goodwill was worth £2.5bn one minute and £1.5bn the next -- and now worth nothing. |
The use of special disclosed items in the financial accounts seem to be “anything but special, as they occurred year after year.” | The use of special disclosed items in the financial accounts seem to be “anything but special, as they occurred year after year.” |
All of the special events -- good weather, terrorism, volcanic ash -- every year there was some special item that helped to hide the underlying problems, rather than reveal the underlying state of the company. | All of the special events -- good weather, terrorism, volcanic ash -- every year there was some special item that helped to hide the underlying problems, rather than reveal the underlying state of the company. |
Failure to sell parts of the business that could have saved other parts; including the failure to sell the airline, failure to sell the travel agencies, the failure to raise the extra £200m needed. | Failure to sell parts of the business that could have saved other parts; including the failure to sell the airline, failure to sell the travel agencies, the failure to raise the extra £200m needed. |
She then dismisses Meysman’s claim that Thomas Cook was “almost there” with its rescue plan. | She then dismisses Meysman’s claim that Thomas Cook was “almost there” with its rescue plan. |
Then looking to the back of the room, Reeves points out that former Thomas Cook staff have attending the hearing, in their uniforms, showing their commitment to the company. | Then looking to the back of the room, Reeves points out that former Thomas Cook staff have attending the hearing, in their uniforms, showing their commitment to the company. |
They do your company proud, and you should reflect, Mr Fankhauser, what you can do to put something back and say sorry to the people whose jobs you have taken and whose holidays you have ruined. | They do your company proud, and you should reflect, Mr Fankhauser, what you can do to put something back and say sorry to the people whose jobs you have taken and whose holidays you have ruined. |
I hope you will go away and reflect on the huge salaries you have earned, and what you can do to put right what you’ve done wrong, she adds. | I hope you will go away and reflect on the huge salaries you have earned, and what you can do to put right what you’ve done wrong, she adds. |
Anna Turley MP turns to pensions. | Anna Turley MP turns to pensions. |
Q: How is it fair that Peter Fankhauser got a pension contribution of 30% of his salary? | Q: How is it fair that Peter Fankhauser got a pension contribution of 30% of his salary? |
Fankhauser says that’s a matter for the remuneration committee, but adds he faces a “considerable impairment” of his pension accumulated between 2001 and 2013 in Germany, when he was running Thomas Cook’s European operations. | Fankhauser says that’s a matter for the remuneration committee, but adds he faces a “considerable impairment” of his pension accumulated between 2001 and 2013 in Germany, when he was running Thomas Cook’s European operations. |
He reiterates that he won’t defend his pay - that’s was set by the company - and adds that he has lost £4m of shares. | He reiterates that he won’t defend his pay - that’s was set by the company - and adds that he has lost £4m of shares. |
Warren Tucker confirms that Thomas Cook’s executive pay packets were “large by any standard” and when compared to average pay at the company (a fine statement of the bleedin’ obvious). | Warren Tucker confirms that Thomas Cook’s executive pay packets were “large by any standard” and when compared to average pay at the company (a fine statement of the bleedin’ obvious). |
Turley points out that Thomas Cook’s workers face uncertainty over their own pensions, and the committee needs to keep a close eye on this. | Turley points out that Thomas Cook’s workers face uncertainty over their own pensions, and the committee needs to keep a close eye on this. |
BEIS committee chair Rachel Reeves circles back to the pay question -- how much of the £20m of board bonuses paid out in the last five years be clawed back? | BEIS committee chair Rachel Reeves circles back to the pay question -- how much of the £20m of board bonuses paid out in the last five years be clawed back? |
Warren Tucker says that Peter Fankhauser received £1.7m in bonuses. One third has been lost, and the clawback procedures means the rest of the 2017 bonus could be clawed back, if the liquidator decides it is appropriate. | Warren Tucker says that Peter Fankhauser received £1.7m in bonuses. One third has been lost, and the clawback procedures means the rest of the 2017 bonus could be clawed back, if the liquidator decides it is appropriate. |
It could be £558,000. | It could be £558,000. |
Fankhauser’s £4m of shares has already been lost. | Fankhauser’s £4m of shares has already been lost. |
Q: What about other bonuses? | Q: What about other bonuses? |
Tucker says the finance director received a £400k bonus in 2017 - and it could also be clawed back. | Tucker says the finance director received a £400k bonus in 2017 - and it could also be clawed back. |
Q: So should they be clawed back? | Q: So should they be clawed back? |
That’s up to the people running the business now, says Tucker. | That’s up to the people running the business now, says Tucker. |
There are four criteria that have to be met -- Statement of the accounts, reputational damage, gross misconduct and financial failure. | There are four criteria that have to be met -- Statement of the accounts, reputational damage, gross misconduct and financial failure. |
Well, the financial failures and reputational damage boxes have been “absolutely ticked” says Reeves triumphantly. | Well, the financial failures and reputational damage boxes have been “absolutely ticked” says Reeves triumphantly. |
Q: So shouldn’t the bonuses be clawed back, in your view? | Q: So shouldn’t the bonuses be clawed back, in your view? |
Tucker argues that Fankhauser worked “exhaustively” to save the company..... | Tucker argues that Fankhauser worked “exhaustively” to save the company..... |
Reeves (who doesn’t appear very impressed by the witnesses) lets rip again: | Reeves (who doesn’t appear very impressed by the witnesses) lets rip again: |
Q: What’s the point of clawback policies if you can’t claw back a bonus when a company collapses, taking jobs, taxpayers money and the hopes and dreams of your customers. You put those facilities in place! | Q: What’s the point of clawback policies if you can’t claw back a bonus when a company collapses, taking jobs, taxpayers money and the hopes and dreams of your customers. You put those facilities in place! |
Tucker says the bonuses can be clawed back - it’s up to the liquidator. | Tucker says the bonuses can be clawed back - it’s up to the liquidator. |