Corporate Travel Management (CTM) faces deepening UK overbilling crisis

Australian travel management company Corporate Travel Management (CTM) is facing serious allegations tied to up to $156 million (A$240 million) in potential revenue reversals, after revealing that signed refund agreements linked to a UK client may not be authentic.

The Brisbane-based company said Wednesday that an independent review had uncovered major concerns involving contracts dating back to 2019, including a large UK government-related accommodation program launched in 2021.

CTM, a business travel firm with annual scale of around $1.3 billion ($2 billion AUD), confirmed it arranged nearly 1.4 million hotel nights across more than 60 properties under urgent, large-scale requirements. The company said many requests were received verbally, putting pressure on internal controls and documentation processes.

By late 2022, CTM identified a £54.6 million ($71.0 million USD) gap between hotel payments and client billing. In response, it agreed to a refund arrangement of up to £28 million ($36.4 million USD), partly to be offset by future services.

However, that agreement has now been called into question. CTM said its external auditor KPMG found indications that signed letters supporting the refund deal may not be genuine.

“The company has become aware of a suggestion that the letter agreements may not, in fact, be authentic,” CTM said in its update to investors. The UK client has since stated it has no record of the agreements.

The company also disclosed wider concerns involving alleged misconduct by a former UK executive, including retention of customer over-payments, alteration of contractual and audit documentation, failure to return refunds, and charging above contractual limits. Authorities have been notified.

An analyst estimated the total exposure at nearly a quarter of a billion dollars, with one analyst describing it as “stunning.”

The company previously raised concerns about potential revenue reversals of £77 million ($100.1 million USD), but this has now risen to £128 million ($166.4 million USD).

CTM shares have been suspended since last year after auditors Deloitte flagged irregularities. The company has since commissioned KPMG to conduct a full forensic review.

CTM chairman Ewen Crouch said the findings were “difficult and confronting,” adding that governance and control systems were being strengthened across the business.

Industry experts say the long timeframe of the issues raises questions about oversight within the UK operation, particularly given the complexity of large-scale accommodation contracting.

Consultants also pointed to potential grey areas in pricing structures, including hotel mark-ups charged to corporate clients, noting that while sometimes permitted, such practices require strict transparency to avoid disputes.

CTM has already paid £12 million ($15.6 million USD) in refunds and is still negotiating final settlement amounts. It may also recover tax paid on previously recognized revenue.

The company reported cash reserves of A$115.7 million ($75.2 million USD) and access to A$75 million ($48.75 million USD) in potential borrowing capacity.

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