Under-fire tycoon's tour firm folds

Published on Saturday 19 December 2009 19:18

THE entrepreneur accused of playing a key role in the collapse of Scotland's biggest airline saw his own travel empire go under yesterday.

As calls for an investigation grew into the part played by Elias Elia's E-Clear credit card payments company in the failure of Flyglobespan, it emerged that the Allbury Travel Group wholly owned by the Cypriot tycoon went into administration at midnight on Friday.

Elia, 39, is already under pressure to explain the role of E-Clear in the dramatic folding of Flyglobespan, which went into administration last week, stranding thousands of passengers abroad and putting more than 500 staff out of work. His firm owed Flyglobespan more than 30 million in credit card payments, cash the ailing Scottish company desperately needed to keep trading.

But last night it emerged that Elia's own group of tour operators, including the once-giant Libra Holidays, had gone out of business on Friday.

Allbury Travel Group, which he wholly owns through a company registered in the offshore tax haven of the British Virgin Islands, ceased trading after two successive years of losses.

Yesterday, the Civil Aviation Authority, the body that regulates airlines and tour operators, said more than 4,000 holidaymakers had been affected by the Allbury collapse, although their money was protected by the tour industry's Atol bonds.

In a statement, it said: "We have been called in to protect customers booked with Allbury Travel Group after the company ceased trading today. There are fewer than 100 holidaymakers currently abroad and approximately 4,000 customers with forward bookings who are yet to travel."

Elia was thrust into the limelight last week after the accountants now running Flyglobespan, and its Edinburgh parent firm Globespan, revealed that E-Clear was holding 36m of payments for flights, most of which had already been taken.

Last night, Scottish finance secretary John Swinney demanded an official probe into E-Clear's involvement.

Swinney said Flyglobespan had been "badly let down by the fact that a private company handling bookings on their behalf have not paid them the money they were due. That is the inescapable commercial reality of what has been faced here."

He added: "There needs to be a full and comprehensive investigation into the circumstances behind the company's collapse, in particular the role of the credit agency E-Clear, which failed to pass on at least 30m of payments to the Globespan Group.

"That money should have been in Globespan's account, ensuring the company could continue to do business. Instead, this Christmas, thousands of passengers have been left stranded across the world and 550 staff are looking for work."

First Minister Alex Salmond joined the chorus of criticism yesterday, describing the matter as a "case for a serious investigation by the department of business regulation".

The London-based firm, which lists Elia and a similarly named firm registered in Nicosia, Cyprus, as its directors, claims to be "one of the leading payment processing companies in the world". But Scotland on Sunday has discovered that it is not registered by the City watchdog, the Financial Services Authority, and it does not have established agreements with the Civil Aviation Authority to protect customers if an airline fails.

The company has been involved in travel trade collapses before. E-Clear also provided credit card transaction services to Slovakian no-frills airline SkyEurope, which went into administration in June. It was reported that the airline was pursuing E-Clear for millions in overdue payments, but this was denied by Elia at the time.

E-Clear also had failed XL Leisure Group and Zoom Airline as customers. XL, once the UK's third biggest tour operator, went into administration last year after a rescue deal led by Elia "came to nothing".

Elia is also understood to have been helping to broker a rescue deal for Flyglobespan, which, although profitable in 2008, made hefty losses in 2007 after a rapid expansion and reputation-tarnishing service failures on some of its new long-haul routes.

Flyglobespan, shortly before it went into administration late on Tuesday, had said it was awaiting regulatory approval for a deal with a Jersey-based investment firm called Halcyon, controlled by E-Clear. Under the terms of the deal, 15m from E-Clear was to be injected into Flyglobespan by Halcyon. But the money failed to arrive and airline bosses said they then had no alternative but to call in administrators.

Scotland on Sunday can also reveal that although E-Clear accounts for 2008 show the company made 15.3m in fees, the company is almost three months late in filing its most recent accounts with Companies House, which companies must do by law. The firm's auditor Jim Harmey confirmed the company has not yet even begun its audit for 2009.

The lack of accounts will be a problem for the administrators, PricewaterhouseCoopers, who will try to reclaim outstanding payments on behalf of the airline's creditors. PWC said it has had "preliminary discussion" with E-Clear and the two sides would meet again tomorrow to clarify the figures.

Elia was yesterday unavailable for comment and nobody was answering the phones at E-Clear.

Elia's empire

E-Clear (UK) PLC: Elia is the chief executive of the British-registered firm and one of its two directors. The other director is a company called E-Clear Global, which is registered at the same address in Nicosia, Cyprus, that Elia lists as his home. E-Clear (UK) PLC has an office in Mayfair, London.

Allbury Travel Group: The Hertfordshire-based company is made up of several tour operators, including Libra Holidays, a specialist in packages to Greece that used to be a major player in the market. Other operators in the group include Argo Holidays and JetLife.

Elia is not a director of Allbury Travel Group, which went into administration on Friday. But information filed at Companies House shows that the group is wholly owned by a firm owned by Elia in the British Virgin Islands called Allbury Ltd.