p6-7 TR Court Oct30 28/10/09 20:22 Page 6
news caa v travel republic
ttglive.com
Pirie says CAA
was intimidatory
and on a mission
The final week of the CAA’s prosecution of Travel Republic for
allegedly breaching Atol rules saw managing director Kane
Pirie launch its defence. Chris Gray and Lee Hayhurst report
T
ravel Republic managing director Kane Pirie was already negotiating a partial exit. “We
Pirie was being treated as if he were were in private discussions with private equity
accused of crimes as bad as those of houses,” answered Pirie.
Kane Pirie outside court on October 28
disgraced US financier Bernie Madoff, Travel Republic did consider “buying itself
it was claimed in court. Nicholas Purnell QC, out” of the dispute with the CAA by getting an
for Travel Republic, made the comparison at Atol, Pirie told Stratford Magistrates Court. rates 5-10% lower than what it paid as an agent.
Stratford Magistrates Court after Pirie was He made the admission as the defence started “If you become a tour operator you get access
cross-examined by Ian Croxford QC, for the CAA. last week, and later claimed the move would to tour operator rates,” he said.
Madoff was jailed for 150 years in June for have been “cost neutral” because it would have “But we don’t want to take a new modern busi-
masterminding a £38 billion fraud that wrecked given it access to tour operator rates. ness and turn it back to being a tour operator.”
the lives of thousands of investors. When the defence opened, Pirie told the court
Pirie and Travel Republic are each charged Taxing questions Travel Republic was being “intimidated” into
with 19 counts of breaching Atol regulations, However, Croxford highlighted an email Pirie getting an Atol in the months before legal
which they deny. sent to the CAA in April 2008 which pointed out proceedings were started.
Purnell’s intervention came after Croxford the potential additional costs of obtaining an He was asked to recall his dealings with the
suggested Travel Republic did not want to get Atol, in particular in relation to VAT liability CAA last year after an initial letter had been sent
an Atol because it would threaten a potential under the Tour Operators’ Margin Scheme. in September 2007.
sell-off to a private equity house. Pirie’s lawyer, “Of course we have looked at the potential He insisted he was never interested in entering
Hugo Keith QC, intervened to say the line of costs of buying ourselves out of the conflict. It’s a major conflict with the CAA and had expected
questioning was “grossly inappropriate”. still a hot debate about whether we would end up that once the authority understood the business
Croxford insisted: “One of the commercial in Toms or not but it’s a potential cost,” Pirie said. it would let the firm continue operating.
considerations was that had they changed Pirie told the court Toms was one of several But, he added, it started to become clear this
the business model it would have had an adverse potential issues applying for an Atol would raise was not the case: “I think they had already made
impact on the negotiations with the private and was an example of the “complications we their minds up very early on that the aim of the
equity houses that were going on.” would have got into”. game was to get us to get an Atol. They have
Purnell intervened to object to the line of Arguing Travel Republic’s decision not to apply been on a mission.”
questioning and treatment of Pirie by Croxford for an Atol was based on commercial reasons,
throughout the day. “At times this morning I Croxford also quoted from a record of a meeting Threat of imprisonment
wondered if it was Bernie Madoff that was being between Pirie and trading standards officials in Pirie said Travel Republic received legal advice
cross-examined,” he said. Kingston, where the firm is based, which the that the company did not need an Atol, and was
Earlier, Croxford asked Pirie about Travel court heard was also investigating the company. also taking advice from Abta.
Republic appointing investment bank Close It said Pirie explained he did not want to lose He said Abta had agreed to work with the CAA
Brothers for advice on a “complete or partial his status as an agent because of tax implications. to make the agency a blueprint for best practice,
exit” from the business. Pirie, however, told the court the expense of an but said the CAA “dismissed that out of hand”.
He claimed that at the time of the XL collapse, Atol would be offset by access to tour operator CAA officials met with Travel Republic
06 30.10.2009
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