Monday, October 12, 2009

Hilton Worldwide may be accused of corporate espionage

A civil lawsuit filed by Starwood hotels accuses two of its former executives, now in the employment of Hilton Worldwide, of stealing proprietary and confidential company information. Hilton Worldwide and the said executives may face a criminal corporate espionage charge, in addition to the above mentioned civil lawsuit.

According to reports, a federal grand jury is currently investigating claims that the former Starwood employees stole confidential documents on a large scale, to help Hilton launch a new brand that would be a rival to Starwood’s W hotels. The investigations into the possible criminal charges are being conducted as part of the civil case filed by Starwood’s in April this year.

Two former Starwood executives were named in the civil lawsuit. Amar Lalvani and Ross Klein have both been accused of stealing large amounts of confidential documentation, ahead of their defection to the Hilton group.

The lawsuit claims that information contained in the documents was used to help Hilton make an expedited entry into the lifestyle hotel market, through the development of the Hilton ‘Denizen’ brand. Starwood claims the information was used by the Hilton group to reposition its luxury brands, while minimizing costs and risks.

Starwood has claimed that a total of 100,000 electronic files were appropriated by Lalvani and Klein, both directly and through other Starwood employees that they took with them to Hilton. The theft is claimed to have taken place both before and after the executives joined Hilton.

Hilton has reportedly dismissed or put several of its employees –including some former Starwood employees – on leave, since the story came to light.

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