It's Getting Tougher To Untangle The Lopez ImbroglioJohn Templeman
`I friend. A good friend," goes Volkswagen's latest German advertising slogan. That's advice that could alsoapply to the $50 billion German auto giant itself, as Volkswagen sinks deeper into a legal slugfest begun after it hired General Motors Corp. executive Jose Ignacio Lopez de Arriortua four long months ago.
In early July, German prosecutors revealed that they had discovered GM documents in the home of Jorge Alvarez Aguirre, a former executive at GM's Adam Opel unit in Germany who was recruited to join the ex-purchasing czar at VW. The discovery seems to bolster GM's contention that Lopez and Alvarez stole trade secrets when they left GM--something both adamantly deny. (Six other GM managers also followed Lopez to VW, but there have been no allegations against any of them.) Now, VW CEO Ferdinand Pi ech has gone on the counterattack, accusing GM of pursuing a vendetta against Lopez and VW.
There's a lot more at stake than which company will win the upper hand in a lurid corporate feud. GM hasn't implicated Pi ech in the affair. But the judgment of the heir to the Porsche car dynasty, who took over as VW's CEO on Jan. 1, will be called into serious question if GM's allegations against Lopez or Alvarez prove true--especially since Lopez has rapidly become Pi ech's top lieutenant. And GM, which has been highly successful in Europe, badly wants to make sure that the secrets of its future European strategy aren't compromised.
For now, at least, the U.S. company seems to be gaining an edge in the fight. In late June, the district attorney's office for the city of Darmstadt, which is investigating GM's allegations, raided an apartment building at 44 Alte Dorfstrasse in Breckenheim, a bucolic village near Wiesbaden. At what had been Alvarez' home, they found "four large boxes of documents that should not have been there," says the D.A.'s spokesman, Georg Nauth.
Opel officials are jubilant. "According to its own statements, the Darmstadt public prosecutor's office has made decisive progress in this case," says Opel Board of Supervisors member Hans Wilhelm G ab. But they also fret over the "highly confidential" nature of some documents that deal with a hush-hush new Opel minicar code-named "the O-car" and plans for a new factory to make it. Lopez had hoped Opel would build the car in a new plant he wanted GM to build in his hometown of Amorebieta in Spain's Basque region. An Opel executive says some of the recovered papers match those "on a list of missing documents" GM has compiled.
VW dismisses GM's allegations. Alvarez, through his Frankfurt-based lawyer Eberhardt Kempf, insists there were no Opel secrets among the documents prosecutors found, many of which, he says, are in the public domain. Lopez has long dismissed any contention that he betrayed GM's secrets as "without foundation." VW spokesman Lutz D. Schilling adds: "We didn't order up or receive any secret documents."
BASQUE PROMISE. Pi ech, meanwhile, implies that the attacks on Lopez are mainly motivated by the personal bitterness toward VW of Louis R. Hughes, president of GM's Zurich-based European operations. Pi ech told the German daily Die Welt that GM is running "an exclusively personal campaign" against Lopez by "the guy from Zurich"--a clear reference to Hughes. Hughes's motivation, said Pi ech: He had applied for the CEO's job at VW and failed to get it.
VW spokesman Schilling insists that Hughes had had "three contacts" with VW about the CEO's job, the last on Apr. 1, 1992, shortly before he was named to the GM Europe job on Apr. 7. GM says VW tried to recruit Hughes twice but that Hughes rebuffed VW. Says Hughes: "I was approached, butI immediately made itquite clear that I was not interested."
The big question now: What move, if any, will the volatile Lopez make next? GM executives believe that Lopez shifted to VW largely because GM was leaning against building its O-car plant at Amorebieta. At first, Lopez appeared to have a firm promise from Pi ech that VW would build a pilot plant in the Basque region. But Pi ech now says that going ahead with the project is "out of the question at this time."
In the meantime, however, Lopez' standing with Pi ech seems more secure than ever. On July 2, the day the Darmstadt D.A.'s office announced its raid in Breckenheim, Pi ech effectively pushed aside his deputy CEO, Frenchman Daniel Goeudevert, making Lopez his undisputed No.2.
Where will it all end? Darmstadt prosecutors haven't yet questioned VW managers, most of whom are now on vacation until Aug. 3. It may take months before there's a clear answer to the questions that have the world's auto makers agog: Who did what and when, and was any of it illegal? How those questions are answered could have a profound impact on VW and GM--and on how tightly the world's auto makers protect their most cherished secrets.