Ad firms that misled charities wound up

High Court closes Manchester-based companies

Four Manchester-based companies that sold advertising space on the grounds that a share would be given to charity have been wound up in the High Court.

The High Court shut down the companies, which worked together, after investigations by the Insolvency Service revealed that they had led companies to believe that a higher proportion of payments made for advertising space would go to charity than they actually donated.

The companies - Yellow Partnership, Strawberry Educational, MPH Direct and Aardvark Learning Resources - traded together publishing books for distribution to schools. Each went into administration last year.

The Insolvency Service investigation discovered that both Yellow Partnership and MPH Direct had advertised themselves to charities as charitable fundraisers and had entered into joint agreements with two charities - child abuse prevention charity Childwatch and international homelessness charity Action for Street Kids - which enabled them to use the names and logos of these charities to sell advertising space.

The service found that the Yellow Partnership paid a combined annual licence fee of only £51,000 to the charities, but generated £100,000 of charity-related sales in the quarter to 28 February 2008 alone.

The investigation revealed that three directors were receiving monthly salaries totalling more than £12,000 and that the companies together generated receipts of more than £1.1m in the eight months to the end of 2008.

The companies were also in breach of the Data Protection Act, retaining advertisers' credit card details and using the information to make unauthorised withdrawals.

A spokesman for the Insolvency Service said it began the investigation after receiving complaints about the methods of fundraising being employed and possible discrepancies in their accounts.

He said the winding up order would enable the service to further investigate the companies because it could now legally question employees and officially examine corporate accounts. He was unable to give further details in case it prejudiced any future court hearing.

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