Jail for stealing company secrets

In a landmark case, oil production manager James Watchorn was jailed for 30 months for stealing company secrets.

After sentencing yesterday, Tag Oil (NZ) Ltd said it now wanted to put the Watchorn incident behind it and to focus on its work programme.

"The whole affair has been very sobering and extremely upsetting for all of our staff," chief operating officer Drew Cadenhead said.

They were a small team who had previously worked with a high degree of trust. The theft had changed the culture of the company, which was regrettable, Cadenhead said.

A Canadian, Watchorn, 42, was found guilty at a trial in the New Plymouth District Court earlier this year on three counts of accessing a computer for dishonest purposes after stealing Tag Oil (NZ) Ltd's geotechnical data from the company's computer.

Watchorn illegally downloaded the files in June 2012 before he left to go to work for a direct competitor, New Zealand Energy Corp, Judge Allan Roberts ruled.

The stolen information contained Tag's successful "secret recipes" in locating oil and gas fields and was worth millions to NZEC.

When police investigated, they found the geophysical data on Watchorn's work and home computers. He had a USB device in his pocket when he was arrested.

However there was no evidence that Watchorn had shared the information with NZEC.

In a last-ditch effort to reduce her client's penalty yesterday, lawyer Susan Hughes, QC, accused Cadenhead of lying about what the theft had cost his company.

Before sentencing yesterday, a disputed facts hearing resulted in Cadenhead again taking the witness box in support of his victim impact statement.

Hughes countered that Cadenhead's claims were "unsupported by anything at all". There was no evidence for his claim of a $7 million loss and there was an "absolute dearth of proof" that any harm was done to Tag, she said.

Watchorn had the information for 82 days and did nothing with it, she said.

Hughes called for a fine as the least restrictive outcome.

Watchorn was now unemployed. There was future work for him but it would be offshore.

"He cannot secure work in New Zealand. He is a good and decent man who has made a mistake and paid an immense price for it," Hughes said.

The judge said Tag asserted that the "voluminous" amount of files Watchorn downloaded and had with him at NZEC contained information Tag would use in its 2013 drilling permits.

As a direct result, Tag inflated its bids in the South Taranaki area to ensure it would not be outbid by its competitor.

Winning the bids was critical to the company's progress. Without Watchorn's actions, Tag would never have committed to this, something the company called the "Watchorn effect".

However, Hughes had said this was a lie, the judge said.

The judge rejected defence efforts, accepting there had been a major financial toll on Tag Oil.

The effect also cost the company extensive time, legal costs, and the Tag security and IT systems were updated.

While no dissemination was found, "this was to all intents and purposes significant offending", the judge said.

Watchorn had no remorse with minimal insight into his offending, his presentence report writer found, and prison was recommended.

Hughes asked for a modest fine while the Crown solicitor Cherie Clarke called for 3-4 year prison sentence.

The case, which had no similar case law to compare it with, was unique, the judge said.

"It seems to be highly calculating and opportunistic.

"The impact on the company is demonstrable," the judge said.

Aggravating features included the serious abuse of trust, pre-meditation and the impact on the company.

The judge declined bail.

Hughes said Watchorn would appeal the conviction today.

Taranaki Daily News