L&H launches new business unit

Speech recognition firm still dogged by fake sales scandal

Embattled speech recognition firm Lernout and Hauspie (L&H) announced the formation of a new business unit last week in an attempt to distract attention away from its accounting problems in Korea.

Dictaphone Communications Recording Systems will focus on developing recording and monitoring systems for call centres and other voice systems, primarily for the public sector and financial services markets.

L&H executives said the move would allow the firm to focus on one of its core competencies, but the launch was overshadowed by the emergence of more details concerning its troubled Korean division.

An investigation by accountancy firm Price waterhouseCoopers found that staff at the unit had tried to fool auditors by posing as customers, sales had been falsified and executives had collaborated with banks. Over six months until June 2000, the unit booked 47 fake licensing agreements worth over $100m (£68m).

The falsified sales allowed Joo Chul Seo, the former chief executive of the Korean unit who was fired last November, to collect $25m in bonuses due to the increased figures.

Phillippe Bodson, chief executive of L&H, said that the company "would probably file a lawsuit" against Seo and the four Korean banks alleged to be involved in the fraud. The company has not ruled out taking action against former senior executives in Belgium.

Bodson paid ironic tribute to the imagination of those executives involved in the scheme and quipped that it should become a case study in business schools in the future.