VW cleared of taking secrets

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AN INDEPENDENT investigation into Jose Ignacio Lopez de Arriortua, Volkswagen's controversial number two, has found no evidence that he supplied the German car maker with secret information from his former employer, General Motors.

The report, by the auditors KPMG Deutschland, will not be formally presented to VW's supervisory board until tomorrow, but company officials said the allegations that confidential GM information entered Volkswagen 'can be unequivocally and completely refuted'.

On the basis of the auditors' findings, the Volkswagen supervisory board is likely to re- affirm its support for Mr Lopez, who is regarded as central to the loss-making company's drive to cut costs.

The board ordered the KPMG investigation in August at the height of the row with GM, which has accused Mr Lopez and several of his colleagues of having taken large amounts of confidential material when they jumped ship to VW earlier this year.

VW sees the report as restoring the company's credibility in the public eye after months of an unusually ugly corporate dispute.

However, the KPMG report, because of its narrow focus on clearing VW as a company of any suspicion of industrial espionage, leaves many questions unanswered. It says nothing about what proprietorial information Mr Lopez and his colleagues may have taken when they left GM. And it sheds no light on the importance of GM documents that Mr Lopez and colleagues conceded were destroyed after they had begun working for VW.

These issues are the focus of criminal investigations being conducted on both sides of the Atlantic, by the FBI and the state prosecutor's office in Darmstadt, western Germany, and which will not be directly affected by the auditors' conclusion. Dorothea Holland, the Darmstadt prosecutor in charge of the case, is sifting through large quantities of computer material seized in a raid on VW in August.

Contrary to VW's persistent denials, the auditors found evidence that some GM material had entered VW's information system. But the report suggests the information, concerning areas such as training, cannot be classified as secret.

Sources said that Mrs Holland had also found evidence of GM material in the VW system, but refused to comment on its significance.

For GM, the main issue is whether company documents were taken without permission, irrespective of whether a competitor judges them to be confidential or not.

The supervisory board will also be discussing how VW will present - with the help of hidden reserves - a small profit in its domestic business this year, despite substantial operating losses.