Travel giant double-billed hotel rooms in refugee accommodation scandal

An Australian travel company, Corporate Travel Management, is facing allegations of overcharging governments for refugee accommodation. The company, which was valued at $2 billion, was invoicing the UK government for more hotel rooms than were available. This issue was detailed in a presentation to Corporate Travel, revealing that auditors in 2023 had urged some directors to disclose the overcharging.

The matter had remained unknown to investors until this year, leading analysts to question why it was not disclosed earlier.

Corporate Travel Management, founded in 1994 by Jamie Pherous, was known for arranging business trips globally and had clients ranging from Australian parliamentarians to large enterprises like Wesfarmers. The company also ran UK government accommodation programs for refugees, at one point housing them on a floating barge. In 2021, Corporate Travel was contracted to find accommodation for 1.4 million nights across about 60 UK hotels.

However, by late 2022, it had identified a gap of almost 50 million British pounds ($96 million) between the amount billed to the UK government and the actual cost to the hotels.

The overcharging scandal became a significant risk in the company's accounts, prompting auditors to flag the issue to the board's audit and risk committee. The auditors provided a 40-page presentation, highlighting the UK problems, including instances of incorrect billing, such as sending bills for more rooms than physically available, and charging for exclusive use of hotels when no exclusivity existed.

The auditors also questioned the classification of certain revenue, stating that it was more appropriate to list the liability in a different area with an explanatory note.

The company has denied any intentional overbilling and stated that no evidence of wrongdoing was uncovered. However, the overbilling only came to light this April, when Corporate Travel blamed a former UK executive, Michael Healy, for handling the client and signed government arrangements. The auditors had previously raised concerns about the classification of certain revenue and the disclosure of the 28 million British pounds refund deal, which was alleged to have been signed by a UK Home Office official.