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Christianity TodayMay (Web-only) 2002



Arthur Andersen Reaches Deal (Again) With Baptist Foundation of Arizona Investors
New TV priests won't be like the Flying Nun, and other stories from online sources around the world

Arthur Andersen again promises $217 million—but will bilked investors really get it?
"Arthur Andersen's on-again, off-again $217 million settlement with investors in the Baptist Foundation of Arizona (BFA) scandal is on again," reports The Arizona Republic. On March 1, the accounting firm promised to pay the same $217 million to those hurt by the church-sponsored real estate Ponzi scheme, then backed out of it by the end of the month. Now, a week into a new trial, Andersen offered the figure again.

"This is the best deal possible for investors, and it's likely to get money in their pockets," said Arizona Attorney General Janet Napolitano.

But is it really? The Wall Street Journal doubts it. "The new settlement by no means assures that the 11,000 Baptist Foundation investors—who lost an estimated $570 million—will recoup significant portions of their losses," the paper reported yesterday (the article is available only to online subscribers).

The worst-case scenario for Baptist Foundation investors would be if Andersen were convicted this month in the criminal case [over its audits of Enron], then quickly filed for bankruptcy-court protection before ever injecting new capital into its technically insolvent Bermuda insurance carrier, which for the time being remains unable to pay or approve claims.
In that scenario, it would be difficult at best for plaintiffs in the Phoenix case to reach Andersen's assets or those of its Bermuda insurer to collect on the latest settlement pledge. However, with the Phoenix trial scheduled to last well into July, Baptist Foundation investors likely would have been in an even worse position from which to collect anything from Andersen if the civil trial proceeded and the firm filed for bankruptcy ...

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