Oil worker fights secret stealing conviction

LYN HUMPHREYS
Last updated 05:00 17/07/2014

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Jailed oil production manager James Watchorn is fighting his conviction for stealing secrets from his former employer.

Watchorn, 42, a Canadian, received a 30-month jail sentence this week for illegally downloading massive amounts of geotechnical data in June 2012 just before taking up a job with Tag (NZ) Ltd's direct competitor New Zealand Energy Corp.

Yesterday the New Plymouth District Court confirmed Watchorn's appeal against conviction had been lodged. It will be heard by the Court of Appeal.

Watchorn is also challenging an Employment Relations Authority ruling that he pay special damages to Tag after the company prosecuted him for breaching his contract.

Tag has coined a new term "the Watchorn Effect" as a result of the action they took when they believed competitors could have their "secret recipes".

In his second victim impact statement to the district court, Tag chief operating officer Drew Cadenhead said the potential damage in the competitive oil and gas exploration business was "almost limitless".

His statement, not read out in court, was released to The Daily News following sentencing.

Cadenhead, who was called a liar by Watchorn's defence in his initial statement to the court, reiterated that Tag and its acquired companies had spent at least $200 million in the last 15 years gathering the data Watchorn downloaded on to his external hard drive.

"It was the unknown and real possibility that the offender would share information with any competitor or new employer that forced Tag to make higher bids [in the annual process for Government drilling permit areas] involving far more firm drilling commitments than they otherwise would have," Cadenhead said.

"The data stored within the files the offender [Watchorn] downloaded would have given a direct competitor an unfair advantage in the secret bidding process.

"We all agreed the potential for NZEC to have our data was likely and therefore we decided to go into completely unprecedented and aggressive bids to ensure Tag secured these [south Taranaki] permits."

Losing a key block of land to a competitor could cost hundreds of millions of dollars, he wrote.

"As a result of drilling the extra wells on both permits, wells Tag never would have committed to had it not been for Watchorn's actions, Tag and its JV partner suffered a $13m loss. The net loss to Tag was $7.9m.

"Tag considers this to be a direct result of the offending," Cadenhead wrote.

Tag called its unprecedented and aggressive commitment to drill eight wells "the Watchorn Effect".

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It also cost Tag an estimated $60,000 to review and upgrade its IT systems.

Many hundreds of hours were spent by Tag staff investigating and dealing with the potential damage of the offending.

Senior management spent many hours analysing the 10,600 pages of file names in the directory listing of Watchorn's hard drive which he equated to about $75,000 of lost time.

Yesterday the major companies involved in New Zealand's oil and gas industry would not comment on the effects the landmark case has had on its members and whether changes had resulted.

- Taranaki Daily News

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