How Culture, Economics and Politics Shape Collective Litigation
Edited by Deborah R. Hensler, Christopher Hodges and Ianika Tzankova
Chapter 14: The L & H case: Belgium’s internet bubble story
Most Belgian mass claim cases from the last ten years have one common feature: they were criminal cases and were brought before a criminal court. Contrary to common law jurisdictions, the victim of a Belgian criminal case is not absent from the criminal trial. He or she is a formal party to the proceedings and has standing to plead. With respect to his or her civil claim, the victim can piggyback on the evidence brought forward by the Public Prosecutor in order to prove a civil fault. The victims only have to prove individual causation and their damages. The Belgian Lernout & Hauspie (L & H) case was one of the largest corporate scandals in European history. L & H had developed advanced Automatic Speech Recognition software and persuaded thousands of people to invest in the company. Some invested all their savings. However, L & H went downhill as quickly as it shot uphill. Allegations of fictitious clients, artificially inflated revenue, forgery, insider trading, abuse of confidence and other similar charges led to the bankruptcy of the company and a criminal investigation. Ultimately, 21 individuals and companies were sued before the Criminal Court of Appeal in Ghent. During the trial, more than 15,000 victims filed civil claims. Three years later the Court issued its ruling. L & H’s founding fathers and most former directors were convicted. The deep-pocket defendants Dexia Bank and KPMG, respectively L & H’s bank and statutory auditor, were acquitted.
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