The tangled web of Bestjet
IT’S now more than a month since former high-flying online travel agency Bestjet.com was placed into administration, and despite the best efforts of Brisbane accounting firm Pilot Partners to unscramble the mess, things appear to be even more confused than ever. The collapse of the company, precipitated by the withdrawal by IATA of the company’s ability to ticket through the Billing and Settlement Plan because of a payment default, came just over five weeks after the widely touted sale of the business by founder Rachel James to travel industry newcomer Robert McVicker in early November.
At the time of the sale, James said she was proud of the company’s achievements over the prior six years, saying she had created the most advanced internet-based travel business in Australia. “I’m very excited about the acquisition and believe the sale will open new doors for the company,” she enthused, while new owner Robert McVicker promised to “take the business to a new level”. The travel industry was also keen to see the business succeed under its new owners, with Bestjet’s success long overshadowed by its much-denied association with Rachel James’ husband Michael, who was banned from being a company director for three years by ASIC following the 2012 collapse of Air Australia, which left almost $100 million in unsecured creditors.
Bestjet also attracted significant attention in 2016 when it took AFTA to court, challenging a now vindicated decision not to renew its ATAS accreditation under the “close associate” provisions of the ATAS charter.
AFTA was successful in its bid to keep Bestjet out of the scheme — a move that in hindsight proved to be prescient given the massive collapse of the company.
Despite McVicker visiting airlines just days before the collapse to talk up the prospects for Bestjet, he decided to appoint administrators on Tuesday 18th December. He later told travelBulletin he had “no choice” but to shut down the company,” saying representations made by the former owners had “failed to materialise”.
The timing of the closure was exquisite, coming just before the busy Christmas travel period, which is understood to have seen airlines honour some tickets which were unpaid, in hopes of avoiding negative publicity. Flight Centre estimated as many as 10,000 passengers were impacted, with GM Tom Walley making the most of the opportunity to point out that the collapse “sends a strong warning to customers about the risks of using particular online travel agencies”.
The plot thickened over the Christmas holiday break, when a mysterious email to the OTA’s customers, originating from the Bestjet mail server, claimed various irregularities by airlines and consolidator CVFR.
The email, riddled with spelling and grammatical errors, also included the personal email addresses of senior airline executives such as Virgin Australia CEO John Borghetti and Emirates Senior Vice President Australasia, Barry Brown, urging customers to contact the carriers directly to insist that their tickets be honoured. The administrators subsequently issued a formal communication saying the email should be ignored. They also confirmed to travelBulletin that an unauthorised person or persons unknown had illegally removed computer equipment and paperwork from the Bestjet offices, while McVicker confirmed he was “looking at taking legal action” against the vendors of the business.
The first creditor’s meeting — attended by representatives of IATA, credit card processor IntegraPay, consolidator CVFR and an angry mob of consumers — continued to deepen the mystery. A director’s report completed by Robert McVicker made repeated references to Michael James, whom Rachel had repeatedly denied having involvement in the management of the business. McVicker confessed that he had no access to the Bestjet accounting system, and specifically referred the administrators to Michael James by including his mobile phone number in the report. Even more shocking was a statement by the administrators citing “evidence that 50% of the shares were held on trust for Ms Rachel James” – later followed by the revelation of an option allowing James to take back all except 10% of Bestjet by 2020. That was a complete contradiction to previous statements by both James and McVicker that the sale had involved 100% of the company.
The creditors list also indicated involvement of a separate Singapore-based company called Bestjet Travel Pte Limited — which apparently had a contractual relationship with Sabre Corporation in regard to payment of millions of dollars in GDS segment rebates. This Singapore company, with director Rachel James alongside two Singaporean citizens, was in turn owned by another Australian company called Bestjet Holdings Pty Limited, also owned by Rachel James.
Even more intriguing was another creditor, also based in Singapore, called OTELab Pte Limited which is understood to have provided services to Bestjet, including its Philippines-based call centre.
It turns out that OTELab’s directors include none other than Michael James himself, alongside the same Singaporean citizens who are directors of Bestjet Travel Pte Limited, Nancy Tan and Sughandhi Unikrishnan.
And to top it all off, OTELab is 100% owned by yet another company called Sea Wagon Investments Limited, based in the notoriously secretive tax haven of the British Virgin Islands.
The industry will be watching with bated breath to see what evolves next from this mess. With so many accusations flying back and forth — particularly between the current and former owners of the business, let’s hope that some proper investigations can be undertaken to uncover the truth of the matter.