1 November 2022, London Marriott Hotel County Hall
21 November 2022, Hilton London Metropole
12 December 2022, etc.venues Monument, London
Last week the Amsterdam District Court convicted the Dutch subsidiary of
travel management company ATPI and its former managing director Willem Starink
of forging invoices that disguised fare mark-ups to two corporate clients.
However, the defendants were acquitted of forgery against two other clients and
of a more serious charge of systematic fraud.
The court fined the company €50,000 for the offences, committed between
2010-2012, and sentenced Starink to 60 hours of community service. The
defendants and Openbaar Ministerie, the Dutch public prosecution service which
brought the case, all have the right to appeal against the verdict, an option
ATPI said it is considering.
The criminal case follows civil proceedings brought in 2014 by the Dutch
Ministry of Security and Justice, one of the two clients whose invoices were
judge ruled breach of contract in 2015 for invoicing a higher sales price than
the purchase price and not paying refunds.
failure to reach a settlement, in 2019 the Dutch Civil Court awarded damages of
€759,000 against ATPI. In the interim, following an internal audit, ATPI
compensated 14 other clients for undisclosed mark-ups even though disclosure
was not a contractual requirement in many of those instances.
In its press statement following last week’s verdict in the criminal
trial ATPI stressed: “We are now a completely different
company than ten years ago, with new management and a different corporate
culture.” ATPI added that it had “learned a lot” and “ambiguous contract
conditions such as with the Ministry of Justice have been a thing of the past
Travel managers can also learn a lot from the case about how they contract
with and remunerate their TMC, whether to tolerate the TMC earning money other
than its client fee on the back of their spend, and how to audit the prices
Opaque operationsDespite reforms at ATPI itself, this is not an old problem that has
vanished from corporate travel, according to Marijke Poppink, Amsterdam-based
owner of the consultancy Poppink TRVL Projects. “I’m not saying it’s fraudulent
but I hear more and more from suppliers that TMCs are taking extra margins and
not forwarding them to the client,” she says.
TMCs themselves acknowledge that client fees form only part of their
income. Revenue from suppliers accounts for two-thirds of the average revenue
of a TMC, states Time for Change, a white paper published jointly by the
UK’s Business Travel Association and consultancy Nina & Pinta in October
But what happens when TMCs gain extra margin from a mark-up? The ATPI civil
and criminal cases show that active concealment of such revenues can be a
breach of contract or even criminal. Yet last week’s verdict (available
in full, in Dutch, here)
established that most of the time such practices are perfectly legitimate even
if they are undeclared.
The defendants were convicted of forging invoices to the Ministry of
Justice and Dutch Central Bank because, the verdict said, “they stated higher prices than for
which the defendant had purchased the services, while it was agreed with these
customers that the defendant was not allowed to charge any other costs or
amounts, except for the agreed transaction fee.”
Similar invoices issued
to clients KPMG and TU Delft, and during a previous contract with ministry,
were not considered forgeries because it was “not proven that the same
agreement had been made in these contracts.”
The judges went on to
say: “Invoicing a higher amount than the purchase amount does not in itself
constitute forgery. For example, the invoice does not state that it
concerns the purchase price.
“In business it is very
common to sell a product or service more expensively than it was purchased
for. This is an important part of the revenue model for many
companies. Only if it must have been clear to both parties that they have
agreed that the price for which the booking has been made is also the price
that must be invoiced, can there be false invoices as referred to here.”
The problem with the
Ministry of Justice contract was that requiring ATPI to offer the most
economical booking options and pass on all savings effectively prevented the
TMC from earning any money. Under European public sector procurement rules, the
ministry had been obliged to select ATPI because it had bid the lowest
transaction fee: just €0.01.
Focus on the fees“Clearly that’s daft,”
says one TMC executive requesting anonymity. But he warns that buyers should consider
what lies behind more reasonable, but nevertheless below-average, fee bids by
TMCs. A typical fee today is €25-€30, the executive says. If a TMC bids €15-€18
“that will probably be subsidised by other income, such as GDS
incentives or supplier overrides.”
But, the same exec continues, if the client can’t see what the TMC is
earning, “is that really a problem? If you try to manage full transparency,
that’s very difficult. I’ve said to clients: ‘if you want me to give you your
share of the overrides I earn, I’ll have to charge you a higher fee next year
if I’m getting lower overrides from the airline’.”
Poppink thinks it is a problem. “If the TMC is earning more from one
supplier than another, how can we be sure the TMC is not pushing us in that
direction?” she says. “TMCs have technology that can put their own preferred
suppliers top of the list.”
She also takes issue with a suggestion by the same TMC exec that travel
managers can ensure they are being sold reasonable fares by checking them
against fares sold publicly online. “Going online is a lot of work. Why would
you do that?” Poppink says.
In the final analysis, Poppink believes, there is an inherent,
irreconcilable tension between TMCs earning income simultaneously from clients
and suppliers. “A TMC cannot be a servant of two masters,” she says.
Consequently, she says, savings and incentives should be passed on to the
corporate client, “but you need to reward the TMC properly for the work it is
doing and the risk it is taking.”
By “risk”, Poppink means avoiding how this year’s coronavirus crisis exposed
the shortcomings of transaction fee models. TMCs were obliged to fulfil duty of
care responsibilities and handle credits and refunds for little or no additional
As for rewarding TMCs, Poppink cites the “smart” ticketing strategies
which got ATPI into trouble. It invoiced clients for flights booked through its
Dutch office that were actually booked at a lower price through offices in
countries such as India.
“If your TMC saves €1,000 on a €3,000 ticket,” says Poppink, citing fictional
figures for illustrative purposes “you can pay them a reward of €100, but if
you are paying a €15 transaction fee and they keep the €1,000, that’s not
Extra marginsAnother person pressing for change is Lisette van Leeuwen. She worked for
ATPI’s Dutch subsidiary when it was managed by Starink but quit her job and the
travel industry because she objected to its practices. Van Leeuwen now works
for an insurance broker.
Regardless of the law or what is stated in a contract, van Leeuwen
believes “charging a fee but not telling the customer about all the extra money
you earn” is morally wrong.
However, in one sense, van Leeuwen agrees with the TMC executive: managing
transparency is very difficult. How can travel managers verify a TMC is booking
the lowest fare available, even if they have a global distribution system
terminal of their own? “Airlines change their fares every couple of minutes,”
van Leeuwen says.
In her view, the only answer is to insist on a random audit of invoices
received from the airline. “That’s normal in the finance sector,” says van
Leeuwen. Like the finance sector, van Leeuwen thinks regulation may be required
to determine what TMCs can and can’t sell, or there should be some kind of
annual audit by an inspectorate.
These ideas might send shivers down the spines of TMCs already struggling
with the worst crisis in modern business travel.
According to the prosecution in the ATPI trial, “extra margins” accounted
for more than half of its profits in the Netherlands at the time of the
activities that came under scrutiny. If corporate clients continue to value
TMCs but want them to earn less money from other sources, clients may have to
pay more for those services themselves.