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Executive at VW to face state prosecutor

THE industrial espionage scandal involving Volkswagen and General Motors will deepen this week when Ignacio Lopez, the VW executive at the centre of the spying allegations, returns from his summer holiday tomorrow to face tough questioning by criminal investigators in Germany. The career of Mr Lopez and the future of VW may depend on the outcome.

Describing its investigations as already 'well advanced', the Darmstadt state prosecutor's office stressed the importance of finally getting to the key personalities in an affair that has already poisoned relations between VW and GM (Mr Lopez's former employer) to an unprecedented degree.

Dorothea Holland, the state prosecutor, is leading an investigation into suspected industrial espionage by a number of former GM employees, including Mr Lopez.

The case against VW and Mr Lopez is said to have grown substantially stronger in the past few days. Hans Wilhelm Gab, vice-president of GM Europe, said after discussions with the prosecutor that he was confident there was now enough evidence to bring criminal charges.

General Motors stepped up the pressure last week by opening a second front against Mr Lopez, calling in the Hamburg state prosecutor to investigate suspected perjury. At a recent civil court hearing, Mr Lopez offered sworn statements that he did not receive certain internal GM documents and photographs of a new car model, which were directly contradicted by evidence from several GM executives.

As VW's stock began to slide amid mounting nervousness, the alarm bells went off at the German company's headquarters, forcing a sudden rethink of its policy of just issuing deadpan denials to GM's allegations. For the first time, Volkswagen went on the counter-attack, wheeling out Ferdinand Piech, its chairman, who accused its American rival of trying to finish off VW in a brutal economic war.

Repeating his unconditional support for Mr Lopez, he said GM was pursuing a personal vendetta against the Spaniard.