The Cypriot owned E-Clear card-payment processor is under investigation in the UK over its alleged role leading to the collapse of the Scottish low fare airline Globespan and Allbury Travel, which specialised in holidays to Greece and Cyprus, both of which went bust in the past few weeks.
PricewaterhouseCoopers is pursuing Mayfair-based E-Clear to find out why the company held back more than GBP 30 mln owed to Globespan, the owner of Flyglobespan.com which operated flights from Scotland to holiday destinations such as Spain and Cyprus.
E-Clear processed Globespan's credit card payments. The sum held by the company is greater than expected in the normal course of business, the administrators said.
According to PwC, if that money had been paid, Globespan would have been able to trade for another month, meaning passengers would have been able to fly during the peak Christmas period. Some 4,500 passengers were stranded abroad last week when the company went into administration.
However, an investigation by the Financial Mirror found that E-Clear may have been within its right to retain the money as part of the “holdback” scheme, if that is what the contract with Globespan warranted.
E-Clear also reportedly processed Allbury Travel's credit card payments, and it is thought to have a further link with the company. E-Clear's chief executive Elias Elia is understood to have a controlling stake in Allbury's parent company.
The Daily Telegraph reported that Elias is also a shareholder in Halcyon Investments, a Jersey-based company that offered to bail out Globespan with an injection of cash. That money never materialised.
E-Clear was also a card-payment processor for XL Leisure, the holiday company which collapsed last year, and failed budget airline Zoom. Administrators for SkyEurope, a Slovakian airline, are also reportedly pursuing a claim against E-Clear.
HOLDBACK
The Financial Mirror has learned from industry sources that E-Clear, like other processing companies, is allowed to hold a percentage of the sales of its clients for a period of time, some times up to six months, as a guarantee against customer rejections or money-back claims.
E-Clear is not a VISA/Mastercard authorised clearer. Instead, it was linked to the processing system of Deutsche Bank.
An industry source told the Financial Mirror that E-Clear’s original arrangement with Globespan was to hold 100% of the turnover for 45 days, to protect E-Clear against customer claims.
The Financial Mirror could not verify a report in the Sunday Herald that E-Clear had extended the time taken to pass on money from Flyglobespan customers to the parent company to 80-90 days in order to earn higher interest from it.
“If the UK media are referring to the holdback amounts being withheld, then there is no legal issue,” the expert told the Financial Mirror.
Scottish Ministers believe there was a “case for a serious investigation by the UK Government’s Department of Business Regulation,” adding that officials needed to look at “the negotiations and the financial structure of Globespan and if indeed money, as is claimed, was being withheld from the company making worse or perhaps even precipitating its cash flow crisis”.
Writing in last week’s Sunday Herald, finance secretary John Swinney also called for a detailed probe into the role of E-Clear: “This is money that 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.”
