VW CHIEFS IN QUANDARY OVER GM DEFECTOR

Top Volkswagen AG officials held a crisis meeting last week amid allegations of industrial espionage against a former General Motors executive who defected to the German automaker, a news report said July 24.

The Welt am Sonntag weekly newspaper said supervisory board members sharply criticized Volkswagen chief Ferdinand Piech for being on vacation as controversy grew around Jose Ignacio Lopez de Arriortua, the Spanish cost-cutting expert who moved from GM to Volkswagen last March.

GM accuses Mr. Lopez of making off with trade secrets. Prosecutors in Darmstadt, just south of Frankfurt, said they found GM documents in a home of a Lopez aide who moved to Volkswagen with him.

The prosecutors have not filed charges, but their revelation intensified suspicion of wrongdoing and was the second setback of the week for Lopez and Volkswagen.

A court in Hamburg lifted a gag order July 20 on the news magazine Der Spiegel, which had said in a May cover story that Lopez and aides who defected with him committed industrial espionage of the highest order.

After hearing three GM witnesses and examining about 20 affidavits, the Hamburg court said Spiegel had sufficient grounds to assert that Lopez took piles of GM documents when he left. Lopez denies the claim.

The report said the Volkswagen supervisory board hopes to keep Lopez and his aides to oversee restructuring of the company, which lost $732.5 million in the first quarter of 1993. But the paper said the board would revoke the contract of anyone proved guilty of industrial espionage.