Prosecutors raid VW offices and Lopez home

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FRANKFURT - Investigations into the so-called Lopez affair took a fresh twist yesterday when German state prosecutors and police raided Volkswagen's headquarters and the homes of its executives in search of documents allegedly stolen from its rival, General Motors, writes John Eisenhammer.

Twenty state prosecutors backed by assistants and police raided 11 locations early yesterday morning. The office and the house of Jose Ignacio Lopez de Arriortua, VW's number two and the focus of GM's suspicions, were searched. VW spokesmen would not say whether any material was removed.

The shock of the raid on one of Germany's national industrial symbols was made even worse by news that VW had lost DM1.6bn ( pounds 630.54m) before tax in the first half of the year, against a DM445m profit a year earlier. Thomas Seiffert, head of the economic section of the Darmstadt state prosecutors' office, said yesterday: 'We have made progress since the beginning of the investigation and are in a better position to evaluate the charges against Lopez.'

State prosecutors confirmed that yesterday's searches were aimed at finding documents from GM and its European subsidiary, Adam Opel, allegedly taken by Mr Lopez and other colleagues when they switched firms.

Klaus Liesen, chairman of VW's supervisory board, said in a newspaper interview yesterday that he could not support Mr Lopez unconditionally until an inquiry by outside auditors had cleared him. 'I will put my hand in the fire for no one as long as an investigation is under way,' he said.

In response to calls from VW that he mediate in the spying dispute, Gunter Rexrodt, the Economics Minister, was due to have a second meeting late last night with David Herman, Opel's chairman.

Opel sources expressed scepticism about the usefulness of the talks, since the criminal investigation had to run its course.

Despite the poor first-half figures, VW told shareholders yesterday that it still hoped earnings would turn round in the second half. But with the outlook bleak for the German and European car markets, analysts remained sceptical about VW achieving its break-even goal.