Marshall at centre of storm: Boardroom bust-up expected at British Airways after humiliating public apology in the High Court

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The Independent Online
SIR COLIN MARSHALL, the British Airways chief executive, has emerged as the key senior BA executive in the Virgin 'dirty tricks' affair.

Since BA's humiliating public apology to Virgin and the payment of pounds 610,000 damages last week, BA insiders say that long-standing feuds have erupted in the boardroom.

Those feuds will come to a head over the next few weeks as non-executive directors, led by Sir Michael Angus, the president of the CBI, question Lord King and Sir Colin about their roles in the affair.

The non-executives are said to be furious at the embarrassing climbdown and not being told about the extent of the 'dirty tricks'.

So far, no heads have rolled. But with Lord King very much a 'hands off' leader, most attention is focusing on Sir Colin, the airline's softly spoken, methodical day-to-day chief.

He is due to step up to chairman in June, when Lord King in effect retires to become the company's president. However, such is the strength of feeling in the boardroom that his elevation may be at risk.

Christopher Clarke, QC, counsel for BA, told the High Court last week that 'the directors of British Airways were not party to any concerted campaign' against Mr Branson and Virgin.

But inquiries by the Independent on Sunday reveal that:

Analysis of confidential information obtained from tapping into Virgin's computer records was sent to Sir Colin's office. BA staff were able to acquire detailed information on which of Virgin's transatlantic routes were profitable, how many passengers they were carrying and what class they flew in. The records also gave home telephone numbers and other personal details of Virgin passengers. BA staff used this information to contact Virgin passengers and persuade them to switch airlines by offering free flights and upgrades.

Sir Colin ordered the production of a detailed report into Virgin and Richard Branson by Brian Basham, BA's external public relations consultant. Sir Colin sanctioned the pounds 40,000 payment for the report, codenamed Barbara, which was highly damaging to BA. Mr Basham presented his findings to Sir Colin in the form of a slide-show and gave him a copy of the report.

Sir Colin authorised Operation Covent Garden, which involved a detailed inquiry into whether BA was the subject of a security leak and whether Virgin was itself investigating BA. He approved the hiring of Ian Johnson Associates, an outside firm of security consultants, to manage Covent Garden. Reports on its progress were sent to Sir Colin. At times, Covent Garden verged on the bizarre with, at one stage, a Sunday newspaper journalist having his rubbish stolen.

The only casualty of the debacle to date is Mr Basham, whose PR contract is not being renewed. David Burnside, BA's influential in-house public affairs chief, is also under threat.

But sales and marketing, headed by Jim Gallery and closely identified with Sir Colin, is likely to take most of the blame.

The board has split into two opposing camps, one for Lord King, the other for Sir Colin, with the feuding dating back to an earlier attempt to unseat Lord King.

Those believed to be leading the pro-King faction are Lord White, Sir Frank Kennedy and Charles Price. Sir Colin's strongest executive supporters are thought to be Robert Ayling, the operations and marketing director, and Derek Stevens, the finance director.

Some of the early moves against Virgin, according to the pro-King lobby, originated from Michael Levin, a former Vietnam veteran turned management consultant, who reported to Sir Colin.

Levin left the airline in 1989, after allegations of a sexual harrassment scandal in New York. He died last year.

Jeremy Warner, page 2

News analysis, pages 4-5

(Photograph omitted)