Corporate Travel Management founder Jamie Pherous resigns amid overcharging scandal

Jamie Pherous, the evangelical founder of Brisbane-based travel business Corporate Travel Management, has left the company amid an overcharging scandal in the UK potentially worth more than $150 million.

The departure of managing director Mr Pherous, who once had Jimmy Barnes sing at his 50^th birthday party, from Corporate Travel was revealed on Monday morning with the $2.3 billion company's shares remaining in suspension.

The company helps arrange travel bookings for clients including Wesfarmers, the Australian government and UK authorities.

Corporate Travel described the departure as mutual between Mr Pherous and the board, but investment market sources were concerned about the move.

"Today's immediate MD departure signals the possibility that the extent of the company's troubles has widened, with no quick fix to the mess," Mark Wade, an independent equity market analyst, told the ABC.

"That's unless this somehow magically appeases all stakeholders, which seems unlikely."

Mr Pherous founded the business with two staff in 1994. He said he was inspired to start the business after working as a young accountant at Arthur Andersen but found himself stuck in airports around the world because the firm's travel agency couldn't arrange flights.

Global expansion

The company's shares rocketed on the ASX after listing in 2010 and expanding across the globe. Mr Pherous, a continually upbeat chief executive, sold chunks of stock worth more than $140 million across almost a decade.

It helped fuel a lifestyle that included paying $150,000 for Barnes to perform songs including Working Class Man at his birthday party at Hamilton Island, multimillion dollar properties in Queensland and a more than $25,000 donation to his former school Brisbane Grammar. The business executive, who goes heli-skiing, has also previously spoken of spending several months in Colorado each year.

He still held almost 16.5 million shares in the company, worth $266 million at the last trading price of $16.07 in August.

Mr Pherous will continue as a consultant with the company for six months, drawing on his fixed annual salary of $675,000.

Sources close to the company described the departure as mutual, and partly reflecting a move to stronger governance.

It came after significant anguish among shareholders whose equities have been frozen for more than half a year. But one investment market source said they had not been pushing for Mr Pherous to resign and questioned why he was leaving now before the company had fully detailed circumstances surrounding the huge refunds.

Corporate Travel chair Ewen Crouch said the departure was a mutual agreement, "taking into account the difficult circumstances and what Jamie and the board believe is in the best interests of the business".

The company's "recent challenges have prompted a broader reflection on the future of the company and the need to strengthen governance and resilience", he said.

"While Jamie has played a pivotal role in (the company's) success, the focus now is on continuing to evolve."

Move in 'best interests of the company'

Mr Pherous did not respond to queries from the ABC but told investors in an announcement: "In the best interests of the company, I have decided to retire as chief executive officer to allow new leadership to focus fully on the task ahead".

He holds an 11.3 per cent stake in the company and said he would have a "vested interest" in its long-term success.

Mr Pherous has kept a home in Brisbane overlooking the river but one family member has registered themselves as an overseas voter, prompting speculation about whether he would move overseas at some stage.

Corporate Travel has been targeted for years by short sellers — who make money from share prices falling — who had doubts about its accounting standards.

The company has always rejected the accusations.

Then in August the company's shares were suspended as it initiated a review into accounting, prompted by discoveries from new auditors Deloitte.

Initially, Corporate Travel explained the problem would not impact cash flows but then unveiled a massive shock in November: it would have to backtrack on revenues recorded in the UK for the past three financial years. That includes 58.2 million pounds ($114 million) for the 2023 and 2024 financial years.

Another 19.4 million pounds it had planned to book in the 2025 financial year was also under review.

The amount to be refunded was yet to be finalised and Corporate Travel has refused to detail what went wrong and which customers were affected.

'Appalling overspend'

The UK Home Office has confirmed it was informed it had been overbilled and an investigation was underway "into this appalling overspend".

The UK government provided large contracts to Corporate Travel including repatriation of citizens during crises such as the COVID-19 pandemic, and more controversially to run an asylum-seeker accommodation program, including housing refugees on barges.

Ana Pedersen, Corporate Travel's chief commercial officer, will become acting chief executive on a $1 million annual base salary while a search is undertaken for a permanent replacement.

Her resume included stints with travel and technology sectors, including 16 years with Netherlands-based BCD Travel, which says it operates in more than 170 countries. UBS analysts told clients that Ms Pedersen's CV read well and indicated she would bring relevant experience across travel and technology sectors.

Corporate Travel last year said it had agreed to a new funding financial line, down from $150 million to $140 million, and had $178 million in cash as of November.

Analyst Mr Wade said it was ominous that the company had been "unable to provide any further update on the reporting timeline or current financial position and performance" such as whether it was still business as usual.

He said unanswered questions included what actually happened in the first place and how investors could rely on assurances that the problem was isolated to the UK market.

One investment source who holds stock also was concerned the departure could perhaps worsen stability within the business.

The fate of investors remains clouded with Corporate Travel talking up having shares reinstated for trading. "This means finalising our accounting matters with integrity and certainty," Ms Pedersen said in a statement.

Some investors have written down the value of their stakes in the company. Investors have included giant fund Australian Super.

One investment source, who does not hold stock, said anyone who had written down the value of shares by 50 per cent might be too optimistic.