Mr. Beddoe has conducted himself honourably according to WJ's board of directors

[rotornut]

www.theglobeandmail.com

WestJet board clears Beddoe
BRENT JANG

From Monday's Globe and Mail

WestJet Airlines Ltd. directors have given their full support to chairman and chief executive officer Clive Beddoe, clearing him of any wrongdoing in WestJet's 2003-04 spying campaign against Air Canada.

In a message sent last week to “All WestJetters,” the board tells employees that Mr. Beddoe has conducted himself honourably.

“The independent committee would like to assure all WestJetters that we are very familiar with the facts in this matter, and we know Clive Beddoe is a man of uncompromising integrity,” said the memo endorsed by nine directors on the airline's 10-member board, which is chaired by the tenth member, Mr. Beddoe.

The board issued the statement in the wake of 100 pages of recently filed court documents that show more than 45 e-mails received by, copied to or sent by Mr. Beddoe that discussed rival operations in detail. Most of the attention focused on Montreal-based Air Canada, including analysis of passenger loads — data improperly obtained from the larger airline's confidential employee website.

Air Canada launched a lawsuit in 2004 that accused WestJet of corporate espionage, but the dispute was settled this past spring, with WestJet issuing an apology for spying and agreeing to pay $15.5-million.

“Clive has the full board of directors' support as chief executive officer and chairman of the board,” the memo said. “We hope you will join us in focusing our attention on continuing to make WestJet the airline of choice for Canadian flyers.”

Ronald Greene, former chairman of Renaissance Energy Ltd., is WestJet's lead director and chairman of the independent committee. His name appears first on the list of nine directors backing Mr. Beddoe. Mr. Greene is the second-largest individual WestJet shareholder, holding stock worth $59-million, trailing only Mr. Beddoe, who controls shares valued at $68-million.

Appearing at the end of the list of names is James Homeniuk, who sits on WestJet's board as the employee representative of the non-unionized group called Pro-Active Communication Team (PACT).

In an Oct. 3 news release, Mr. Beddoe described the WestJet e-mails that were contained in an Air Canada booklet submitted to court as containing “false allegations.”

The material, which indicate a broader scope of WestJet's espionage campaign than was previously known, was entered last month into the public court file. Dated May 2, 2006, the booklet is titled “Brief of sample e-mails reflecting Clive Beddoe's involvement in the alleged misconduct.” None of the allegations have been proven in court.

The other directors endorsing Mr. Beddoe are: Allan Jackson, Wilmot Matthews, Murph Hannon, Arthur Scace, Hugh Bolton, Larry Pollock and Brett Godfrey.

“The articles that have appeared in The Globe and Mail over the last few days regarding the Air Canada lawsuit have been very disturbing to us all,” the memo said. “The lawsuit from the beginning was handled exclusively by an independent committee of the board of directors.”

That independent committee in 2004 comprised Mr. Greene, Mr. Jackson, Mr. Matthews, Mr. Hannon, Mr. Pollock and Donald MacDonald. Mr. MacDonald, head of a private oil-field-services firm, left WestJet's board earlier this year. Thomas (Tim) Morgan, a WestJet co-founder, resigned from the airline a year ago, and stepped down as a director in early 2006.

Calgary-based WestJet appointed two new independent directors in September, 2005: Mr. Scace, chairman of Bank of Nova Scotia, and Mr. Bolton, whose directorships include Toronto-Dominion Bank. Mr. Godfrey, CEO of Virgin Blue Airlines in Australia, joined WestJet's board in August, 2006.

Air Canada alleges that starting in March, 2003, WestJet co-founder Mark Hill viewed confidential data for one year on load factors, or the proportion of seats filled, from a special reservations website for Air Canada employees and retirees. Air Canada filed its lawsuit in April, 2004, and Mr. Hill resigned as WestJet vice-president of strategic planning three months later.

The out-of-court settlement included a joint statement that “certain members of WestJet management engaged in an extensive practice of covertly accessing a password-protected, proprietary employee website maintained by Air Canada to download detailed and commercially sensitive information without authorization or consent from Air Canada.”

FMR Corp. of Boston, which manages the Fidelity family of funds, is WestJet's largest shareholder. FMR recently owned 19.1 million WestJet shares, or a 14.7-per-cent interest. The second-largest shareholder is Ontario Teachers Pension Plan, which sold 1.7 million WestJet shares in May, reducing its holding to 16.8 million shares.

[Flyer 1492]

When I saw this today, I almost lost my lunch.

[brucelee]

Would we expect anything different from that culture?

[rotornut]

When I saw this today, I almost lost my lunch.
Well, if you did, he could make you "one heck of a burger"!

[Tan]

These WJ Board of Directors folks are our business leaders and we wonder why the world is in trouble. On the other hand this Gentleman deserves our respect.

http://www.theglobeandmail.com/servl.../Business/home

The WestJet whistle-blower
BRENT JANG AND PATRICK BRETHOUR

From Wednesday's Globe and Mail

TORONTO AND CALGARY — On his four-acre spread in central Alberta, the man who blew the whistle on WestJet Airlines is convinced that not only did he do the right thing, he did the company a big favour.

Melvin Crothers exited his WestJet job, left the airline industry and has yet to receive any thanks from Air Canada for exposing Calgary-based WestJet's 2003-2004 spying campaign. He doesn't hold out much hope that Air Canada chairman Robert Milton or WestJet chairman Clive Beddoe will praise him for playing the good Samaritan.

“I have not got one word of thanks from anybody,” Mr. Crothers said. “When I get the card in the mail from Robert Milton telling me that I'm such a wonderful guy, then maybe I'll hang that on the wall. I doubt that will ever come.”

Two twists of fate in a single afternoon would transform Mr. Crothers into a whistle-blower, setting in motion a chain of events that would lead to Air Canada launching a $220-million lawsuit, WestJet executive departures, an offer by Mr. Beddoe to resign and a public humiliation for the discount carrier.

For the past three years, the identify of the Didsbury, Alta., resident as corporate whistle-blower has been closely guarded by Air Canada (Chris Bolin for The Globe and Mail)

If not for casual cubicle banter, Mr. Crothers may have never found out that WestJet was accessing confidential Air Canada data. And if not for Mr. Beddoe being on vacation, the reluctant informant would not have contacted Air Canada directly.

In April of 2004, Air Canada filed its lawsuit against WestJet, but the two airlines reached an out-of-court settlement this May.

WestJet admitted that it had stolen sensitive data on passenger loads by electronically spying on Air Canada's confidential employee website.

“It certainly has been an embarrassment for Clive,” Mr. Crothers said.

“I think this has made WestJet a lot stronger because it's hardened the employees and it's made people aware that they should hold their heads up and have ethics. But I don't know why Clive would want to thank me.”

WestJet spokeswoman Gillian Bentley said Tuesday that WestJet considers the court file to be a closed case. “It's behind us, we're moving on. We're not interested in bringing this up over and over again. We settled the lawsuit and it's a done deal,” said Ms. Bentley, who declined further comment.

Mr. Crothers, 60, worked in WestJet's marketing department for one year, resigning four days after Air Canada filed the lawsuit because he thought it would be “untenable” to stay. Prior to WestJet, his 25-year aviation career included stops at Pacific Western Airlines, Canadian Airlines International and Signature Vacations.

This summer, he kept busy with chores, taking 30 minutes to cut his sprawling lawn with a riding mower or hopping into his red 1996 Dodge Ram truck to haul lumber. He now teaches a first-aid course in nearby Didsbury, 85 kilometres north of Calgary, and obtained a real-estate licence on Friday, with a view to becoming an agent.

The volunteer chairman for the Didsbury region's tourism association also enjoys family reunions on the acreage whenever his two daughters visit him and his second wife, Pat. Mr. Crothers particularly likes playing chess with his seven-year-old grandson, Owen, one of five grandchildren.

But the seemingly bright picture of semi-retirement belies his sadness at leaving the airline industry. Mr. Crothers made $180,000 a year at Signature Vacations in the late 1990s, plus bonuses. At WestJet, he drew an annual salary of $50,000.

For the past 2½ years, the whistle-blower's identity at WestJet has been known only to a small circle of lawyers and executives at Canada's two largest airlines. It has been an enduring mystery to the public as to how it came to pass that an anonymous WestJet worker exposed improper accessing of Air Canada's employee website.

The Globe and Mail obtained legal documents to identify and trace Mr. Crothers, who then agreed to speak publicly for the first time about how — and why — he blew the whistle. Air Canada had gone to great lengths to keep him anonymous, blacking out his name and phone number in a handwritten note entered as a court exhibit.

Three years ago, retirement was the farthest thing from his mind. He had just landed a full-time position at WestJet after spending six months working on contract. It all came down to four hours on the Friday afternoon of Dec. 19, 2003. At 1:30 p.m., Mr. Crothers was having a “casual conversation” at the desk of Duncan Bureau, WestJet director of sales, according to the informant's sworn affidavit.

Mr. Bureau couldn't be reached Tuesday for comment.

Mr. Bureau displayed his computer screen bearing Air Canada's logo, said the affidavit, and the screen also showed Air Canada's load factors, or the proportion of available seats filled, between Calgary and Vancouver.

By 1:45 p.m., Mr. Crothers — stewing back in his cubicle — became so upset about the “information leak” that he decided to go straight to the top and inform Mr. Beddoe, who is WestJet's chief executive officer as well as its chairman.

“I went up to see if Clive was there, and Clive wasn't there. He was away for the Christmas vacation,” Mr. Crothers recalled.

Mr. Beddoe has said that he told WestJet co-founder Mark Hill to stop his electronic snooping in the summer of 2003, but that Mr. Hill disobeyed the order. Mr. Hill resigned as WestJet vice-president of strategic planning in July of 2004.

What Mr. Crothers wonders is how events might have played out if Mr. Beddoe had been in his office six days before Christmas, 2003.

With Mr. Beddoe absent, the WestJet whistle-blower wasn't sure what to do next. At 4 p.m., just 2½hours after Mr. Crothers saw the website, he left the airline's Calgary head office at his usual quitting time. But the security breach gnawed away at him.

At 4:50 p.m. at his rural home, he made a short phone call to former WestJet president Stephen Smith — at that point the president of Air Canada's Calgary-based Zip Air operation — telling him about how WestJet had access to the confidential website. Mr. Crothers thought he was making an anonymous phone call, but Mr. Smith had call display. That brief conversation triggered a series of events that led to Air Canada discovering WestJet's electronic spying campaign.

At the time, Mr. Crothers believed that WestJet was not to blame, and it was a “rogue employee” at Air Canada who was leaking internal data on passenger loads to WestJet by allowing access to the website. In hindsight, he says, he was being naive.

“I've taken a lot of personal pain and agony over this,” Mr. Crothers said. “I didn't like what I found out about the website. It was wrong, morally and ethically, and I'm a Christian man. I was upset at the whole deal.”

One reason for his upset: questions about whether he had benefited financially. An Alberta court's subpoena requested that he show up at a Toronto law office in June of 2004 and bring along his banking records starting from Dec. 1, 2003.

WestJet lawyers grilled Mr. Crothers about his personal finances. He emphasizes that Mr. Milton, who is based in Montreal, never had any contact with him to entice him to become a witness in the lawsuit.

“They were wrongly assuming that Robert Milton was sending me cheques,” Mr. Crothers said. “Air Canada wasn't paying me under the table.”

Mr. Crothers had given a gift to his eldest daughter — purebred Red Angus cattle, worth $11,000. That gift was back in 1997 and was paid for by his own savings, and not in late 2003, he was forced to explain to WestJet lawyers.

Those details are contained in the whistle-blower's affidavit, part of a court record that was made publicly available only in recent weeks.

But Mr. Crothers doesn't see himself as an informant. He views his role as that of a corporate hero, and he is hurt by how he felt compelled to abruptly resign from WestJet.

On April 5, 2004, the day before Air Canada filed its lawsuit, two Air Canada security managers named Len Meilleur and Doug Workman showed up with no notice at Mr. Crothers's home and told him about the pending lawsuit.

From Dec. 19, 2003, until April 5, 2004, he said, he stayed quiet about his clandestine phone call to Zip's Mr. Smith. So when the two Air Canada managers arrived, he began to shake and turn red.

Adding to the stress, Mr. Crothers's father-in-law was suffering from a brain tumour, and died months later.

On April 6, 2004, Air Canada filed its espionage lawsuit against WestJet. Four days later, Mr. Crothers quit his job.

Blowing the whistle came with a high personal cost, but Mr. Crothers said it's what his father, a by-the-rules police officer, would have expected. It was his duty to bring the matter to light, and that duty came with a price, not a payoff.

“This has been terribly hard, and it certainly wasn't for any personal gain,” Mr. Crothers said.