Car wars head for courts: VW is under fire from Opel, writes John Eisenhammer

WHAT started as an extraordinary transatlantic tug-of-war between two automobile giants has exploded into a bare-fisted fight.

Having berated Volkswagen for ungentlemanly behaviour, General Motors and its European subsidiary Opel have now thrown caution to the winds, accusing the German company not just of poaching its key executives en bloc but of having helped itself to large quantities of secret information.

GM has asked the state prosecutor in Darmstadt to investigate its suspicions with a view to legal proceedings 'for what we believe is the taking of confidential documents', in the words of Louis Hughes, head of GM's international operations.

Yesterday the man at the centre of the storm, Ignacio Lopez de Arriortua, who was poached from GM in March to become VW's head of production and purchasing, protested his innocence and outrage. 'I can only imagine that General Motors was so upset by my departure that they want to destroy my credibility by means of a deliberate campaign,' he declared.

Ferdinand Piech, VW's chief executive, gave a public assurance of his complete trust in Mr Lopez. 'It is simply incomprehensible, the lengths which are being gone to to discredit Volkswagen's reputation,' he said.

At the weekend David Herman, Opel's chairman, said it had been forced to the 'regrettable point' of seeking legal proceedings against Mr Lopez and seven former GM managers who accompanied him to VW because repeated requests for assurances that no confidential documents had been taken had received unsatisfactory replies.

Recent internal investigations in the US had shown that 'very large quantities of important papers are just not there any more', Opel said.

The full force of Opel's fears was vented yesterday in Spiegel magazine, which ran its main story on Mr Lopez entitled 'The Unscrupulous One', based on generous assistance from the GM subsidiary. It suggested that Volkswagen was in possession of secret construction plans, internal cost calculations and purchasing lists for all 60,000 parts used by Opel.

The high phase of the drama began during a weekend of operatic intensity in March when Mr Lopez, GM's purchasing chief, first declared he was leaving for Volkswagen, then protested his undying love for GM and said he could not go - and finally packed his bags and flew to Germany.

He was tempted by a fantastic salary and the job of spearheading Mr Piech's drive to hack the fat from a company that lost DM1.2bn ( pounds 480m) in the first quarter of 1993.

An eccentric and charismatic Basque who inspires immense loyalty among his closest colleagues, unease among fellow executives and fear among suppliers mercilessly ground down by his cost-cutting crusade, Mr Lopez was followed to VW by most of his immediate GM team.

It was not long before Mr Herman took the unusual step of publicly accusing Volkswagen of 'wanting to solve its own problems through a massive head-hunting campaign at Opel'. A court injuction was taken out in April to stop such poaching.

Earlier this month Opel went to court again seeking to stop, on grounds of breach of contract, the seven GM managers who left with Mr Lopez from working at VW for a year.

No one doubts Mr Lopez's acumen. During the late 1980s and early 1990s, as head of parts purchasing for GM Europe, he played an important role in transforming it into a highly profitable business - in stark contrast to both GM's core North American operations and Volkswagen.

He was moved to Detroit last year to carry on his crusade within GM's domestic operations. But it was not long before the waging of a similar campaign was uppermost in the mind of Ferdinand Piech, who took over a badly shaken Volkswagen at the beginning of this year.

The unusual bitterness of the battle between the giants points up just how raw the international automobile climate has become after the blasts of recession tore the coverings from vast areas of inefficiency.

(Photographs omitted)