Threat of Just desserts hangs over Andersen

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The Independent Online

Andersen, the accountancy firm at the centre of the Enron scandal, faces possible legal action over its role at the children's media firm Just Group (JG), which is in administration.

JG collapsed earlier this month after attempts to raise further funding failed. It is believed one reason for the collapse was the acquisition of MediaKey, a publishing company, in November 2000. JG has said MediaKey had large debts that were not found until after the acquisition, and its revenues had not met expectations.

Andersen conducted due diligence for the acquisition, and were auditors and financial advisers of JG and auditors for MediaKey before it was bought. "On behalf of the shareholders, we have looked very closely at the acquisition of MediaKey by Just Group, and have discussed the matter with solicitors," said Chris Jones, a spokesperson for the Just Action Group (JAG), which represents about 1,000 shareholders.

JAG is trying to raise funding for the company, so it can be taken out of administration, and rallying support among shareholders through its website,

"We feel that for MediaKey to be valued and bought for £7m which, it transpired, was in the region of £7m too much, serious questions have to asked of Andersen," Mr Jones said. "Why were assets apparently over-stated and why were so many creditors not identified, particularly when Andersen was also the auditor for MediaKey?"

Andersen said it was allowed to do only limited due diligence on the acquisition, owing to the Takeover Code. It had not seen JG's accounts since the results for the year to April 2000, because JG did not publish its 2001 accounts before going into administration.