An independent review of the actions of the Travel Industry Council of Ontario before, during and after the failure of One Step Travel has concluded that the Council largely followed established policies and procedures and reasonably handled the closure and related claims from consumers.
One Step Travel closed in November, 2006 and the resulting claims from consumers who did not receive travel services they paid for drained $1 million from Ontario’s Travel Industry Compensation Fund. One Step Travel and its president Mazdak Anzari were later charged and convicted of failing to maintain trust accounts as required under the Travel Industry Act. Anzari was sentenced to 18 months in jail but had fled the country by that time and has never served time.
Following the costly failure, some Ontario travel industry members, including ARTA Canada President Bruce Bishins, suggested TICO should have acted more quickly and decisively by revoking One Step’s registration after it displayed a pattern of late filing of financial statements. At TICO’s 2008 AGM, some registrants called for an independent review, and TICO agreed.
The review was conducted by the Ontario Internal Audit Division, an agency of the provincial government. In its report, it stated that it was satisfied that TICO “followed established policies and procedures” but it did note two areas where TICO could improve practices, with specific regard to clarifying its policies on when proposals to revoke registrations are to be issued, and on improving certain documentation practices.
In a press tele-conference discussing the results of the review, Jill Wykes, chair of the TICO Board, said that TICO welcomed the independent assessment and has made changes based on the report’s recommendations. “We were pleased to see that the report generally sanctioned TICO’s actions,” Wykes said. “The recommendations that were made were welcome but would not have changed the outcome.”
Michael Janigan, a Ministerial appointee to the TICO board and the executive director of the Public Interest Advocacy Centre in Ottawa, said the One Step failure was an isolated case. “We have a situation where we had a rogue (Anzari) and the rogue absconded with the funds. You can never prevent fraud with any amount of regulation or monitoring. To a large extent that is why the fund exists.”
In dealing with registrants who are not in compliance with financial reporting, trust accounting or working capital requirements, TICO has only two options: it can work with registrants to encourage compliance or it can issue a ‘Proposal to Revoke Registration.’ Wykes admits that the limited number of options can sometimes hamstring the council, as it tries to strike a “delicate balance” of encouraging compliance without being “a great big lead hammer.”
“We would like to have other options. We’re working with the government on that and hopeful that one day we will have other options in our toolbox,” Wykes said.
The fact that One Step Travel was frequently late with its financial statement filings is not unusual, said Wykes. Of approximately 2,500 registrants, “a large percentage” has been late with a filing.
There were also complaints made about One Step Travel by competitors, including Ottawa based Handa Travel, which was also vocal at the 2008 TICO AGM in its belief that One Step’s registration should have been revoked prior to its failure. Wykes says TICO is constantly in receipt of complaints by registrants about their competitors.
“If we were to take action on every agency that we had a complaint about, we’d shut down half the industry,” she said.
More background on the One Step closure and the entire text of the independent report can be found here.
