Andersen Insurer Balks at Payout

Accounting firm Andersen said Sunday that its insurance carrier would not pay $217million to a Baptist fund-raising group to settle allegations of accounting malpractice.

Andersen lawyers have sent a letter to parties involved in the lawsuit settlement informing them that its insurance carrier, Professional Services Insurance Co., has not approved the payment to a trust for the Baptist Foundation of America, Andersen said.

Additional details regarding the matter were not available.

Andersen had agreed to pay within 45 days of the March 1 settlement, which averted a trial over charges of negligence against Andersen by the trust. Andersen did not admit any wrongdoing in the settlement.

The settlement was the second-largest payout by one of the Big Five accounting firms. The biggest settlement involved Ernst & Young, which in 1999 paid $335million to investors in travel and real estate company Cendant Corp.

The Baptist Foundation, under bankruptcy protection and represented by the liquidation trust, alleged that Andersen breached its fiduciary duties by failing to disclose financial wrongdoing by former trust managers even after it was alerted to the fraud.

Andersen said others, including the state of Arizona, the foundation’s law firm and the Arizona Southern Baptist Convention, were all warned of possible irregularities at the fund-raising group and had failed to act.