Prosecutors say Lopez stole secrets

The former head of purchasing at General Motors, Jose Ignacio Lopez de Arriortua, systematically stole trade secrets from the company as part of a premeditated act hatched several months before he jumped ship for Volkswagen, German prosecutors claimed yesterday.

The allegations came as Mr Lopez was formally indicted on charges of industrial espionage by the prosecutor's office in Darmstadt, near Frankfurt.

Charged alongside Mr Lopez were three other former GM executives who defected to VW with him three-and-a-half years ago - Jose Manuel Gutierrez, Jorge Alvarez and Rosario Piazza.

However, the prosecutors said that their investigation had found no evidence that VW's chief executive, Ferdinand Piech, or anyone else from the German car maker was involved in the alleged espionage. Gerhard Andres, the chief public prosecutor, said more serious charges of fraud were not filed because no measurable amount of financial damage to GM could be determined.

But referring to Mr Lopez and the other indicted executives, he said: "The accused planned to acquire business documents from the research, planning, production, and purchasing departments with a view toward their planned joint move to VW." This had been premeditated and planned months ahead.

Mr Lopez, head of purchasing for GM's European subsidiary Opel had revolutionised the car maker's relationship with suppliers, preparing the ground for cheaper production.

He was first approached by Mr Piech in November 1992. Following their meeting, Mr Lopez and three of his closest colleagues began rifling through GM's confidential documents, the prosecutors allege.

In March 1993 Mr Lopez informed GM that he was leaving, whereupon he was offered a promotion, which he gratefully accepted. A few days later, however, Mr Piech trumped the counter-offer, and Mr Lopez this time handed GM his final letter of resignation and took the first plane to Germany.

At VW headquarters in Wolfsburg, the GM defectors set themselves up in offices enveloped in a bubble of hi-tech security. Their mission was to develop the concept for an assembly plant codenamed "B" in the Spanish Basque country.

The factory would be the embodiment of all Lopez principles combined: cars would be slotted together from "modules", rather than smaller components as before, and fitted on the assembly line largely by workers employed by outside contractors at cheaper rates

Only one such factory existed elsewhere in the world, and even then only in blueprint form: the hush-hush "Plant X" designed by GM and also destined for northern Spain. Those are the very plans that Mr Lopez is said to have stolen.

In addition to these plans the Darmstadt prosecutors claim that the four accused also pinched suppliers' price lists, cost information on virtually the entire GM-Opel range in Europe, and documents outlining GM's cost- cutting strategy for 1992.

If convicted, Mr Lopez could face a five-year prison term, though as a first offender he would probably escape with a hefty fine.

Lawyers acting for Mr Lopez challenged the prosecutors' findings, saying they had mistaken documents that GM had previously made public for company secrets and that many of their witnesses were not credible. Jurgen Taschke and Eberhard Wahle, representing Mr Lopez, said the charges would not stand up in court and they would seek to have them dismissed.

Key dates in the Lopez affair

1980 - Lopez joins GM Spain

1986 - Lopez appointed Head of Purchasing at Opel

Nov 92 - Lopez has first meeting with Ferdinand Piech,

chairman of VW

Mar 93 - Lopez joins VW as Head of Purchasing, then quits to become president of GM North America, which he then quits after a few days to rejoin VW

April 93 - Opel starts legal action against Lopez for industrial espionage

8 Mar 96 - GM files civil suit in America against VW for criminal conspiracy

13 May - VW sues GM for defamation

26 Nov - US judge in Detroit rules GM can pursue claim for damages

29 Nov - Lopez resigns from VW, but is rehired immediately as a consultant

13 Dec - Lopez and three other former executives formally indicted by German prosecutors