Hilton could face criminal charges over corporate espionage

07 October 2009
Hilton could face criminal charges over corporate espionage

A federal grand jury is investigating whether Hilton Worldwide and a number of its former executives could face criminal charges in an ongoing legal battle with Starwood Hotels and Resorts over theft of ideas, the Wall Street Journal reports today.

The grand jury will look into whether the hotel group, which is owned by private equity firm Blackstone Group, used confidential documents and concepts taken from the rival operator by former Starwood executives who defected to Hilton and helped launch the hotel group's Denizen brand.

Denizen was developed to rival Starwood's W brand by Ross Klein, a former Starwood executive instrumental - along with his colleague Amar Lalvani who went with him to Hilton - in the development of W.

After the controversial launch of the Denizen brand in April this year with Klein at the helm as the head of Hilton Hotels' luxury lifestyle brands, Starwood took legal action against Klein, leading to his resignation, as well as that of Lalvani.

Starwood is now in the process of suing Hilton, citing "the clearest imaginable case of corporate espionage, theft of trade secrets, unfair competition and computer fraud."

Klein, who had been on paid administrative leave since the allegations were made until his recent resignation has been replaced by John Vanderslice, former chief executive of Miraval Spa in Tucson, Arizona.

Can the hotel brands do boutique? >>

Hilton to settle out of court with Starwood in Denizen row?
Hilton directors stole more than 100,000 computer files, says Starwood >>

By Rosie Birkett

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