Lopez indicted over taking secrets to VW

German prosecutors yesterday indicted Jose Ignacio Lopez de Arriortua, the former purchasing chief of Volkswagen, on charges of taking trade secrets to the German car maker when he left General Motors of the US in 1993.

Mr Lopez's lawyers said the charges of embezzlement and betrayal of trade secrets would not stand up in court, and they would seek to have them dismissed. Full details of the charges will be announced on Friday. If found guilty, Mr Lopez could go to prison for five years.

Both GM and Volkswagen declared partial victory over the indictment. The German company emphasised that no charges of conspiracy between Mr Lopez and VW were filed.

VW repeated that it never requested nor used foreign secrets. But GM asserted that the charge of betraying trade secrets implied the opposite.

A spokesman said the indictment confirmed the initial suspicion of industrial espionage raised by Adam Opel, the German car company owned by GM. "It is again evident that the attempts by Volkswagen to characterise the affair as a private matter of Mr Lopez are misleading," he added.

Prosecutors in Darmstadt also indicted a second former manager along with two current managers who followed Mr Lopez from GM to VW. They are Jose Manuel Gutierrez, a former VW manager, and Jorge Alvarez and Rosario Piazza, who both work for VW's Spanish subsidiary Seat. The three were members of Mr Lopez's purchasing department. Mr Gutierrez had since left VW, Mr Alvarez had taken over purchasing at VW's Spanish Seat unit where Piazza had joined him, said a spokesman for VW.

The Darmstadt prosecutors office was unavailable for comment, but will tomorrow disclose the results of its three-year investigation of GM's charges against VW.

Investors in VW were unsettled by the indictment. The company's shares fell DM9.05 to DM604 (pounds 237), making a total loss of 5.3 per cent since the US District Court in Detroit decided a fortnight ago to allow GM's industrial espionage lawsuit to continue.

The lawsuits have left analysts divided on their investment recommendations for VW. For many, however, VW's rising profits and operating strength override concern about fall-out from the dispute with GM.

"I am relatively surprised how steady the shares have been through all of this," Georg Stuerzer, an auto analyst at Bayerische Vereinsbank said yesterday. "The fundamental operating development is very, very good, which seems to be balancing the price pressure from the so-called Lopez affair."

Separately, Volkswagen said yesterday that it expected net profits this year to be "significantly above" last year's DM336m.