An urgent investigation into the collapse of Thomas Cook ordered by the government is “too little too late” according to Unite, which said ministers had failed to learn the lessons from the Carillion disaster.
The holiday firm imploded on Monday after it failed to secure a £200m rescue package, leaving 9,000 UK jobs at risk, stranding 150,000 holidaymakers abroad and prompting the biggest ever peacetime repatriation of British citizens.
Business secretary Andrea Leadsom has ordered the Official Receiver, which administrates liquidations and bankruptcies, to investigate if the actions of Thomas Cooks’ bosses “caused detriment to creditors or to the pension schemes”.
The Financial Reporting Council, the UK accountancy regulator, is also considering an investigation in Thomas Cook, following reports that the firm’s fat cats have been awarded £20m in salaries and bonuses since 2014.
Unite assistant general secretary Diana Holland said, “The thousands of workers who yesterday lost their jobs and the hundreds of thousands of people who had their holidays cancelled, will draw no comfort from the announcement of a probe by the Official Receiver.
“Yet again the government is guilty of being asleep at the wheel. It failed to learn the lessons from Carillion’s collapse. If the government had done so the collapse of Thomas Cook may have been avoided.”
The collapse of Thomas Cook comes on the back of other recent corporate collapses including Patisserie Valerie, British Steel and Interserve.
Despite the litany of recent corporate failures, the Official Receiver’s report into the collapse of outsourcing giant Carillion is not expected before the beginning of 2021, three years after the company’s devastating collapse.
System is broken
Holland said, “The UK financial regulatory system is broken and without proper checks and balances we have no idea if other Thomas Cook’s and Carillion’s are in the pipeline and no ability to prevent them from occurring.”
Unite has produced a series of proposals on reforming the UK’s financial regulatory system in its report: Ending Bandit Capitalism: learning the lessons following Carillion’s collapse.
Among the recommendations is a cut in the number of financial regulators, with the creation of new regulators who have reals powers and the ability to intervene before companies collapse.
Given the growing concerns about Thomas Cook’s accounts, which included large amounts of “goodwill” on their balance sheet, radical reform of accountancy and auditing practices are also urgently needed.
“The collapse of Thomas Cook has not been allowed to happen in other countries as their governments and regulators have mechanisms to stop such a disastrous and immediate collapse as has happened in the UK,” said Holland.
“Radical reform of the UK’s financial regulatory system must be an absolute priority to prevent other workers in the future being dumped on the scrapheap without warning, through absolutely no fault of their own.”