Industrial espionage, destroyed documents, search warrants and contempt of court – all around the home delivery of your groceries

Ocado grocery delivery van. Pic credit: Which?magazine

Extraordinary story of how two high flying former Ocado executives planned to use the company’s trade secrets to get business from rivals Waitrose

You will know that home delivery of your groceries is competitive with supermarkets vying with each other for your business. All rely on some form of new technology to get this done.

This week a final court judgement saw a City solicitor being convicted of destroying documents required by a court order in a culmination of an extraordinary saga that has raged for the last three years over home grocery deliveries.

The case had been brought by Ocado Plc, the parent company of the on line grocery retailer, which used to deliver groceries for Waitrose and now delivers groceries for Marks and Spencer as well as its own goods.

One of the co founders of Ocado, Jonathan Faiman and later another executive, Jonathan Hillary, left Ocado to set up a rival grocery technology business called  Project Today Holdings Ltd.

Marks and Spencer logo; Pic Credit: Wikipedia Commons

But as the courts were told their business plan was far from ethical. Mr Faiman tried to get a deal with M&S but was beaten by his former employer, Ocado. At a meeting with M&S to discuss the plans with the company’s chief executive, Steve Rowe, Mr Faiman insisted his colleague -Mr Hillary, still working for Ocado, should have a secret identity only known as” Jon”. Unfortunately for him when the trial began Steve Rowe recognised that Jon was Mr Hillary. A memo also revealed Mr Faiman had contacted senior Ocado staff using ” burner phones”.

Mr Faiman then opened talks with Waitrose and wanted to win their business using Ocado’s trade secrets. To get their business he got Mr Hillary to copy them. Over dinner at Mr Hillary’s home Mr Hillary provided Mr Faiman and Mr McKeeve with documents. These included a copy of a set of contract terms recently agreed between Ocado and M&S entitled, “Agreement for the Provision of the Apricot Smart Platform” (the “OSP Contract”), and operational schedules for Ocado’s contract for the provision of the Ocado Smart Platform to Groupe Casino (a French Supermarket group) (the “Operational Schedules”).

Discussions with Waitrose proceeded constructively, and on 15 May 2019, Mr Hillary resigned from his position at Ocado for a new role with Today. On 16 May 2019, Waitrose announced a new commercial relationship with Today. On 23 May, Mr Hillary was placed on gardening leave by Ocado. He remained an Ocado employee.

Ocado came to be concerned about Mr Hillary’s activities in communicating with Mr Faiman. They suspected he had handed over confidential information and/or had been working for Today while still employed by Ocado, in breach of his contract of employment.

According to Mischon de Reya, Ocado’s solicitors Faiman and Hillary later admitted in a settlement statement “While still employed by Ocado, Mr Hillary, at Mr Faiman’s request, provided Mr Faiman with a significant number of confidential documents belonging to Ocado, including documents relating to the running of Ocado’s automated warehouses and the key agreement under which Ocado would provide its online grocery technology to the joint venture with M&S.”

Mr Faiman then admitted he was taking the hard copy confidential documents with Ocado’s trade secrets to Waitrose with the aim of cementing a business deal just as Ocado, went for a search warrant to find out whether its documents had been stolen. Waitrose when it realised what was happening pulled out of any deal.

But the situation was going to get much worse. The courts granted a search warrant covering the Connaught Hotel, a luxury five star hotel in Mayfair, London where Mr Faiman was staying and Mr Hillary’s home in Ascot and the firm’s offices in The Foundry in Fulham. The search warrant covered documents, electronic devices and mobile phones and Ocado’s secret documents were recovered from Mr Faiman’s hotel rooms.

Connaught Hotel, Mayfair where lawyers found the Ocado documents

Mr Faiman decided to involve his friend Raymond McKeeve, a City solicitor , who counted his company as a client. Mr McKeeve had been involved in the Waitrose negotiations. When told of the search warrants he panicked rang an IT employee and told him to ” burn all” – ie start destroying them. This happened just after the search warrants had been served.

The reason, as the courts were to discover, was that the company had a sophisticated private message and call system -known as the 3CX app- as a way of disguising its dealings between Mr Faiman and Mr Hillary so Ocado would not know. The system could be destroyed permanently at short notice. Mr McKeeve was particularly worried as his wife’s name Belinda de Lucy who then was elected as a Brexit Party European MP for South East England, without her knowledge and he thought she would be drawn into a dispute with Ocado. Her name was first used as pseudonym for Mr Hillary to communicate with Mr Faiman.

Ocado bring claim for criminal contempt against City solicitor

Ocado plc brought a claim for criminal contempt accusing Mr McKeeve of intentionally interfering with the administration of justice by causing the deletion of documents which were essential to Ocado’s case and thwarting the purpose of the search warrant. They also tried to extend this to other documents and email systems.

Mr Faiman and Mr Hillary had to agree to permanently destroy all the stolen documents and a pay a very large undisclosed sum to Ocado in a settlement. His company is now in administration – the last known accounts at Companies House showing it owed over £8m to creditors- including nearly £2m to HM Revenue and Customs. Mr Faiman declares his official residence is in the tax haven of Monaco.

But for Mr McKeeve it was not all over as he faced criminal contempt charges.

Mr Justice Adam Johnson Pic Credit: Judicial Appointments Commission

At the hearing Mr McKeeve, a City solicitor with a number of private equity clients, clearly did not realise how serious this had been. The judge, Mr Justice Adam Johnson, described him in his judgement as “an intelligent and driven individual. At the relevant time, he had a successful practice as a solicitor in the private equity field, which he was proud of.”

The judge said “at times [he] exhibited a degree of arrogance (for example, in the evidence he gave about his ability to “annihilate” complex legal documents at high speed). He was also at times combative in the evidence he gave.”

The judge said he had shown ” shame and embarrassment” for what he had done saying at one point: “The idea that I would have committed a contempt of anything just horrifies me. The word is so perfectly chosen because it is a most horrendous word. I would only show contempt where enemies of the state or people are trying to harm my family. The idea of showing contempt for the rule of law and the court is just beyond the pale.”

McKeeve’s act of colossal stupidity – judge

But the judge said despite everything he “could not quite bring himself to accept that what he had done wrong might amount to a contempt of Court.” What he did the judge concluded his conduct had been a ‘spontaneous act of colossal stupidity’.

Judge Johnson found him guilty of contempt of court over the destruction of the phone system but not on other additional cases brought by Ocado,

A spokesperson for Ocado said: ‘We felt compelled to bring this solicitor’s conduct to the attention of the court as it was the right thing to do. Ocado has been vindicated in its decision to do so. We welcome the judgment but take no joy in it. It is regrettable that a solicitor failed in his duty to uphold the administration of justice and was found to be in criminal contempt of court.’

The case was adjourned until October 4 to decide what sanctions Mr McKeeve will face for his contempt.

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