The chief financial officer of the tour operator TUI Travel has quit after a £117m accounting blunder forced the company to restate its annual results.
Paul Bowtell, who was highly rated by City analysts, will leave Europe's biggest holiday company at the end of this year. TUI blamed the integration of accounting systems following the 2007 merger of Britain's First Choice Travel with the tourism division of Germany's Tui. The news sent its shares plunging by 11 per cent yesterday.
The write-off cut the company's profit for the year to September by £42m, or nearly 10 per cent, to £401m. Its year-end net assets were reduced by £70m and there will be a £5m hit in the current year. The total charge is four times an initial estimate for losses caused by two computer systems recording different prices for holidays.
Peter Long, the TUI chief executive, said the bungle was not directly Mr Bowtell's fault and he was sorry about his departure. The UK finance director, David Taylor, left the company at the end of last month and its managing director, Dermot Blastland, is retiring at the end of the year.
"I have a high opinion of Paul but he has done a very honourable thing," Mr Long added. "It is not down to Paul Bowtell but it happened on his watch."
The money was lost because price alterations for holidays recorded by TUI's retail division did not appear on systems used by travel agents. Discounts and sweeteners such as airline upgrades on £18bn of transactions mounted up unnoticed over four or five years. Mr Long said TUI's auditor KPMG had found issues for the first nine months of the year, leading to an initial £29m charge and that the year-end audit showed up another £88m.
"Having had the audit committee last night, we saw the absolute scale and that is why we announced to the market," he said. He would not discuss whether KPMG should have spotted the problems earlier and said any appraisal of TUI's actions was for the audit committee.
Separately, TUI reported a healthy increase in sales. Holiday bookings by UK customers are up 6 per cent since last year. But analysts said the error underlined suspicions that the earnings of touroperators were of low quality. TUI's shares fell 25.4p to 205p.
The fall guy
TUI refused to discuss whether Paul Bowtell would get a pay-off after falling on his sword, but these things usually work out for the departing executive. Reflecting his previous high standing in the City, Mr Bowtell received £1.05m in salary, bonuses and benefits last year, as well as a £294,000 deferred bonus in shares and £123,000 paid in to his pension.
He held 1,167,266 TUI shares through the annual bonus scheme on 1 October, which were valued at £2.97m. At just 42, it would be a heavy personal blow if his career in corporate life was ended by TUI's foul-up, but in doing the decent thing he may have left room for a comeback.