The former chief executive of Just Group, the children's media group now in administration, has been accused of "misappropriating" company expenses for per- sonal use by Just's finance director.
Just, which owns part of the rights to the Butt-Ugly Martians, went into administration earlier this month with cashflow problems and large debts. Wilf Shorrocks, the former chief executive, and his wife Paula, the former commercial director, left the company last September.
A witness statement by finance director David Newcombe in the administration proceedings at the High Court in London states: "In September 2001, forensic accountants were employed to consider the manner in which [Mr Shorrocks and Mrs Shorrocks] had used company funds. The report indicated that company funds had been misappropriated to meet personal expenses."
Mr Shorrocks said: "They have made allegations that are completely unfounded. We have issued proceedings against them." He said he has issued three court actions over his dismissal, but has had no response from Just's lawyers.
Separately, the witness statement says Mr Newcombe found the company could have run out of money by mid-2001, and outstanding debts were "uncollectable". But in the summer of last year the company organised a party for the launch of Butt-Ugly Martians in New York, said to have cost about £500,000.
The statement also says Mr Newcombe was concerned that income had been included in the accounts for the year to April 2001 that was conditional on future events. The results for that year were never published. The reported results for the year to April 2000, which showed a profit of £1.2m, could have shown a net loss if the accounts had been treated more "prudently", because royalties from a long-term contract were included, said the statement. The accounts were audited by Andersen, the accountants embroiled in the Enron scandal. Just Group does not own all the rights to revenue from Butt-Ugly Martians. "The agreement is very complicated but what is clear is that it does not own a majority share," said the administrator, KPMG. Other owners include Vivendi Universal, the media multinational.
Mr Newcombe's witness statement says the company will receive a "substantial income stream" from Butt-Ugly Martians, but that will not be realised until the fourth quarter of 2002. The administrators are said to have had a lot of interest in the company from children's media firms, and details have been sent to them. Some shareholders of the Just Action Group intend to raise funds to take the company out of administration and replace the board. They are summoning support and finance from shareholders through their website, Justgroup.biz.Reuse content