More than two weeks after the Court of Appeal in Ghent ordered six former directors to pay damages of around 655 million euros in the Lernout & Hauspie (L&H) fraud case, no appeal has been lodged against the ruling. Of the parties theoretically entitled to compensation, only a few have sought compensation that they could attempt to recover from convicts.
The speech technology company went bankrupt in 2001 after having been in a free-fall since the summer of 2000 due to a fraud scandal following reports of accounting irregularities. On September 20, 2010, the Ghent Court of Appeal imposed the verdicts in the L&H fraud case and sentenced founders Joe Lernout and Paul Hausby to five years in prison, two of which were suspended.
Over a billion in damages
The Court of Appeal was only able to move forward with settling the civil claims in the case in 2014, following proceedings before the Court of Cassation. The civil parties mainly hoped to convict the company’s auditor KPMG, who, unlike the other defendants, would have sufficient financial resources. The Ghent Court of Appeal previously ruled that KPMG should not pay any compensation.
On December 10, the court finally ruled that six former directors, including Joe Lernott and Paul Hausby, were jointly and severally sentenced to pay €655 million in damages. Because it was allocated with compensatory interest at the legal interest rate as of October 24, 2001, the amount has increased to more than one billion euros.
What is the Lernout & Hauspie fraud case? see below:
Only two victims demanded compensation
Victims who have received compensation can in theory try to recover the money from each of the six parties. However, convicts do not have enough resources, so there is little chance that victims will see their money. A total of 4,336 individual claims have been declared on good grounds, in whole or in part, of which 937 are civil claims without counsel. After the ruling, the court provided four computers to allow victims to search for their compensation, but only two people used them. 23 victims benefited from the option to obtain a copy of the judgment through registration.
The parties had fifteen days to appeal the cassation ruling, but since that did not happen, the curtain fell on Belgium’s largest fraud lawsuit.
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