German Prosecutors Expected to Charge VW Executive Lopez
FRANKFURT: Prosecutors are expected to file criminal charges within weeks against a senior executive at Volkswagen AG, Jose Ignacio Lopez de Arriortua, relating to allegations of industrial spying against General Motors Corp., according to lawyers for Mr. Lopez, who left VW for GM in 1993.
Such an indictment against Mr. Lopez would cap a series of legal and public-relations setbacks for the German automaker in its three-year legal feud with GM, a dispute involving some of the world's most powerful captains of industry and one that has inflamed emotions on both sides of the Atlantic.
The indictment would be likely to escalate the GM-VW battle, raising the likelihood that similar cases simultaneously would be heard in courtrooms in Germany and in Detroit, where GM in March filed a civil suit against Mr. Lopez and other top VW managers.
VW, which has spent the past three years arguing that it did not expect an indictment, on Friday found itself thrust into an unusual position. The Frankfurt-based attorney representing Mr. Lopez, Juergen Taschke, released a statement that confirmed a newspaper report that Mr. Taschke was expecting Mr. Lopez to be charged.
The three-paragraph statement did not say how Mr. Taschke had learned of the pending charges, and Rupert Ahrens, a spokesman for Mr. Lopez, said Mr. Taschke did not intend to disclose how he had learned of them. Mr. Taschke "has specific knowledge that leads him to the expectation that this will happen," Mr. Ahrens said.
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An indictment, if issued, would not automatically mean that Mr. Lopez would lose his management board job as VW's head of production and purchasing, said Klaus Kocks, a VW spokesman.
"There will be no automatic reaction," Mr. Kocks said.
Mr. Ahrens said he would not comment on the charges because they had not yet been issued. Under German law, the penalty for industrial espionage can include fines and a prison term of as much as five years.
The Lopez affair will hardly end with the indictment. James Denvir, the lead attorney representing VW in the Detroit case, said it could be as long as two years before the Detroit case even went to trial. Documents and depositions must be translated, and dozens of witnesses must coordinate travel schedules, Mr. Denvir said.
But it also means the long-running battle is about to enter a new, equally drawn-out and potentially even more combative phase as the charges finally are expected to get a hearing in the courtroom. The feud has so far consisted of a volley of allegations, anecdotes and charges involving what GM calls boxloads of secret documents and GM's allegations that its documents had been shredded.
It does not help that GM's Detroit complaint at times reads like a detective novel, attracting even more attention to the case, Mr. Denvir said.
Once the case lands in the courts, assuming the two sides avoid out-of-court settlements, GM's allegations will get an extended and systematic public airing. With five law firms in the United States alone already part of the VW defense team — which also includes the attorney Robert Strauss, the former chairman of the Democratic Party — VW has "an enormous amount of legal talent," Mr. Denvir said.
VW concedes that the prospect of a long-running legal affair creates public relations complications, Mr. Kocks said. The negative image generated by the Lopez case already has damaged the company's share price, its ability to attract new managers and possibly car sales, Mr. Kocks said.
The attention over the Lopez affair in recent weeks has obscured the fact that VW's business of making cars has improved this year. Earnings and sales are up, while VW and its subsidiaries have rolled out a series of new models that have won acclaim. Meanwhile, VW sponsored a legal workshop last week to introduce its lawyers and released an eight-page report explaining all the suits and counter suits.
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