* "I am pretty certain I had no involvement," Sykes said
* Sykes says he did not work in M&A department at time of
* Dragon founders seeking hundreds of millions in damages
By Scott Malone
BOSTON, Dec 14 The head of Goldman Sachs Group
Inc's mergers and acquisition business denied that he had
any role in the 2000 sale of voice recognition software company
Dragon Systems to a buyer that collapsed soon afterward.
Dragon's founders have sued Goldman, accusing the Wall
Street bank of failing them by advising them to pursue the $580
million all-stock sale to Lernout & Haupsie shortly before the
Belgian software company went bankrupt in an accounting scandal.
Gene Sykes, who has spent his entire banking career at
Goldman and now runs its M&A business, denied in video testimony
played in U.S. District Court in Boston on Friday that he had
worked on that deal.
"I am pretty certain I had no involvement, but I also was
involved in many transactions and had a lot of people involved
in a lot of transactions," Sykes said in a video deposition
recorded in December 2011.
While Sykes has spent most of his career in Goldman's M&A
operation, during the time of the Dragon deal, he was working at
its principal investment area, the department that invests the
company's own money.
Janet and James Baker, who founded Dragon and owned 51
percent of it, said they had lost their life's work after they
sold the company. They had only sold a few million dollars worth
of the stock they had received before L&H's collapse wiped out
the value of their remaining shares.
The Bakers and two other early Dragon employees have sued
Goldman for several hundred million dollars.
Goldman lawyers have argued that the Bakers hired the bank
to structure a deal with L&H, not to investigate it for
accounting fraud. They have said that Goldman advised Dragon to
hire an accountant to analyze the buyer's stability.
Goldman denied civil claims that include gross negligence
and breach of fiduciary duty. The jury trial, which began on
Monday, is expected to last two months.
The deal, and L&H's collapse, came around the end of the
technology stock bubble of the late 1990s, a time when investors
had been eagerly chasing new and sometimes poorly managed
Sykes, who today has a seat on Goldman's powerful 28-member
management committee, said he had been unaware of the specifics
of L&H's collapse prior to being called to testify.
"I can't recall that I ever became aware of it independently
of hearing that I was going to be deposed in this case," Sykes
said, adding that he knew the name was "a newsworthy item at
some point years ago" but had not recalled specifics.
Dressed in a tie and white shirt, with his jacket over the
back of his chair, Sykes said his role was to advise clients and
negotiate deals, but that clients make their own decisions.
"I make sure I try to give them the right advice so that
they can make good decisions about the various options they
have," Sykes said.
One of the four Goldman bankers who advised Dragon on the
deal said in early court testimony that he had reported to
Goldman's reputation has been tarnished in recent years by
allegations that the company has treated clients shabbily.
Earlier this year, one executive leaving the bank published a
resignation letter calling the bank a "toxic" place where
managing directors referred to their clients as "muppets."
The bank has said that employee performed poorly and left
after demanding a raise and promotion that he was denied.
Nuance Communications Inc now owns the Dragon