Auditor says Fantasy Tours was beyond rescue

Auditor Paul Marmara told the court that even if someone injected a vast sum of capital in Fantasy Tours and Golden Travel Club, the company would still have floundered as it was beyond rescue.

Marmara was appointed by the court to prepare an audit of the company's financial situation from 2009 to date.

He said the blame lay with the company's insistence on selling tours to Corfu, the company's main market, although clients said they would not book because of the Consumer Affairs Authority's warning on the company.

Taking the witness stand in the case seeing Fantasy Tours seeking a declaration of bankruptcy after cancelling clients' holidays, the auditor said that he was close to conclude the draft report for the 2009 finances.

The witness explained how he is finding it difficult to compile the report from 2010 onwards as the police has seized the server containing the documents.

However the witness managed to draft a report for 2009 and the first six months of 2013.

The auditor confirmed that Karl Azzopardi had acquired the company in 2009.

In the first two years there was a great loss but then a small profit was registered. The estimated cumulative loss at the end of 2009 was €120,000.

During the first six months of 2013, the company managed to attract a revenue of €131,000 against a total expenditure of €95,000.

This generated a profit of €35,000. Similarly the company had earned €49,795 from Thompson Cruises, of which €30,500 were expenses.

Again the company registered a profit of €19,295. However these figures did not include the Corfu package.

Azzopardi had taken upon himself commitments with airlines and hotels which had to be honoured even if the tours were not sold. Corfu tours generated a total income of €53,900 however the expenditure added up to €140,000, leaving the company with a loss of €38,000.

Thus in the first six month of 2013 the company ran at a cumulative loss of €33,000 over travelling arrangements alone.

The auditor continued that expenses for 2013 totalled €195,00. These were mainly due to salaries and advertising campaigns aimed at promoting the Corfu packages.

Repeatedly asked if he is sure of wanting to take the witness stand, company owner Karl Azzopardi reiterated that he would have paid any price to save his company, a belief which cost him his self esteem, his public image and hundreds of thousands of his personal fortune.

Azzopardi claimed that he had even refrained from cashing his salary cheques for a number of months. These, together with other financial documents, contracts with hotels and advertising material were exhibited in court.

Asked by Judge Zammit McKeon why he kept on taking clients' money only to close shop the following day, Azzopardi replied he needed the money to pay his suppliers.

Moments later he changed his answer and said he kept on believing that more bookings and a possible merger would save his company.

"What is the price of your pride? How can you face the world of consumers again after treating clients like this?" the Judge asked.

Azzopardi kept mum and kept his head down as he leafed through the documents.

The Judge held he could not understand how and why Azzopardi chose to keep taking money from his clients right up to the very last day.

Under oath, Azzopardi said he had tried all options. "I approached Mondial Travel and Britannia Tours. I even had a foreign investor interested in a merger, but they all turned me down," he said.

Azzopardi explained how his wife, his mother and himself had become shareholders of Golden Travel Club with the other owners being Alfred Spiteri and Roderick Grech.

In 2009, he had taken over the company after both Spiteri and Grech resigned. Having bought the company in a bid to save the name he had helped create, he overlooked the financial reports stating debts amounting to between €400,000 and €500,000.

However when he realised the extent of the financial burdens he kept going. "Spiteri used to take care of the company's accounts and he left the coffers empty", Azzopardi claimed.

He also realised the company owed Air Malta €132,000. A payment schedule was agreed to and the debt was settled in a year. The company registered a minor profit in 2010 and a higher profit in 2011, he explained.

During 2012, Azzopardi was hospitalised after being diagnosed with cancer. While still in hospital the MCCAA issued a public warning about Fantasy Tours due to the substantial amount of complaints the Authority had received.

Azzopardi said 150 complaints about Fantasy Tours were registered between 2008 to 2013. The complaints were all settled to protect his company's name yet the MCCAA never removed the public warning.

"They kept telling me they are waiting to see if more complaints will be received, meanwhile anyone googling Fantasy Tours was seeing the warning before they ever got to the company's website", he said.

The financial crises in Europe compounded the problem as agents and hoteliers started asking for cash in advance rather than allowing credit terms.

Corfu, the company's main tour registered huge losses. While holidaymakers cancelled their tours due to the MCCAA warning, the company had to keep honouring its pre-booked chartered flights and hotel rooms.

"There were instances were chartered flights left with only 60 people on board. It cost the company €12,500 per flight, yet we never sold a full flight."

On 30 July, Azzopardi made a last attempt to save the company. He deposited  €30,000 of his own money in Fantasy Tour's coffers.

On 7 August Fantasy Tours informed its clients that their booked holidays were cancelled. An SMS informed holiday makers that the company closed down and their planned breaks had dissolved. The previous day, on 6 August, Azzopardi had phoned his outlets telling staff not to take more bookings.

The court postponed the hearing form 15 November for more witnesses.