Bank’s alarm bells over BestJet payments
NATIONAL Australia Bank became concerned early last year about the high volume of airline ticket payments being processed for online travel agency BestJet, a court has heard.
Payment services company IntegraPay processed card payments of airline tickets for BestJet, which went into voluntary administration in December, with interim funding through NAB.
In February last year, NAB told IntegraPay it was imposing a $20 million-a-month limit on the amount of ticket payment funds to be processed for BestJet, the Federal Court heard.
Key staff of IntegraPay were questioned by counsel for BestJet liquidators at a public examination of the affairs of the failed company.
Thousands of customers had tickets cancelled after the BestJet collapse, which left more than 6000 people owed more than $26 million.
Earlier in the public hearings BestJet's new director, Robert McVicker of McVicker International, which bought the company in November, told the court BestJet previously had an $800 million-a-year turnover.
The court heard NAB mid last year commissioned PriceWaterhouseCoopers to do an independent review of the transactions between IntegraPay and BestJet.
Afterwards, NAB told IntegraPay it would bring in a $15 million a month limit on BestJet airline ticket payment transactions from January 1, conditional on signing of a tri-party agreement, the court heard.
IntegraPay's Chief Innovation Officer, Tony Braden, confirmed that at the beginning of last year IntegraPay conducted an internal review of the risk involved in it providing payment services for BestJet.
Mr Braden said the risk was more to do with the amount of money being paid than the processing.
In July last year, NAB asked BestJet and IntegraPay to sign a tri-party agreement with it, and indicated it intended to limit its processing of BestJet transactions to $15 million a month by January 1, the court heard.
"Initially Mr James came back with questions and comments,'' Mr Braden said.
He said IntegraPay sought to persuade NAB to increase the processing limit above $15 million a month.
After BestJet was sold to McVicker International in November, NAB was still pressing IntegraPay to get the tri-party agreement signed, Mr Braden said.
He said IntegraPay chased up BestJet more than once, before telling NAB that the new owners would not execute the agreement.
Mr Braden agreed that NAB expressed "considerable disquiet'' about the new BestJet owner's response.
The court was told NAB continued to process payments for BestJet through IntegraPay, but said it would not process any more payments from January 1 this year if the agreement was not signed.
IntegraPay's chief executive officer, Chris Urry, compliance officer, Brett Ferguson, and Mr Braden each said they did not tell BestJet the money sent to them had to be kept in a separate bank account or a trust fund.
They also said they did not specify how the ticket payments money could be used or says that it should be used by BestJet to purchase airline tickets.
On Tuesday, Michael James who negotiated the BestJet sale, told the court he now only owns a car and a trailer.
Mr James, who is still chief executive officer of BestJet Singapore, which is owned by his wife, Rachel James, said he did not own any properties, art or collectibles.
Ms James sold Fortitude Valley-based Australian company BestJet and two associated companies to McVicker International six weeks before it went into voluntary administration.
Mr James yesterday told the Federal Court he had friends who had e-tickets they had paid for, which were cancelled after the collapse.
When asked if he agreed that people who booked, paid for and received e-tickets, prior to December 11, should not have had them cancelled, Mr James said: "I tend to agree''.
He said he "mostly believed'' airlines should have honoured the tickets, in those cases.
"We had friends affected by this. They made the booking in early November and their flights were cancelled,'' Mr James said.
Mr James, who said he negotiated the BestJet share sale agreement with McVicker International, said he did not believe his wife was involved in any negotiations.
He said he had not seen any computers or servers that were in BestJet's Fortitude Valley office on December 18, the day of voluntary administration, since that date.
The court heard all computers, servers and other office equipment disappeared that day.
The public hearings have been adjourned to a date to be fixed.