Andersen Insurer Refuses $217M Payment

April 2, 2002

Accounting firm Andersen has announced that its insurance carrier, Bermuda-based Professional Services Insurance Co., has not given its approval to a trust payment of $217 million for a Baptist fund-raising group over allegations of accounting malpractice, according to a Reuters report.

The Baptist Foundation of America, under bankruptcy protection and represented by the liquidation trust, alleged that Andersen violated its fiduciary obligations by failing to divulge financial misconduct by former trust managers even after it was made aware of the alleged fraud.

Andersen lawyers sent a letter to all parties involved in the lawsuit settlement informing of the rejection of payment to the trust for the Baptist Foundation.

An agreement gave Andersen 45 days from the March 1 settlement to pay, avoiding a trial over charges of alleged negligence from Andersen by the trust. Andersen denies any wrongdoing in the settlement.

Andersen has contended that the state of Arizona, the foundation’s law firm, the Arizona Southern Baptist Convention, and others were all warned of potential irregularities at the fund-raising group and did not act.

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