Pressure builds on Lopez at VW

JOSE Ignacio Lopez de Arriortua, the controversial head of production at Volkswagen, may be forced to resign following the arrest of two blackmailers and a police raid on the German car company's headquarters last week.

Analysts believe pressure is building up on VW to part with Mr Lopez whether or not allegations that he stole industrial secrets from General Motors, his former employer, turn out to be true. Klaus Liesen, head of the group's supervisory board, said he would not put his hand in the fire for Mr Lopez while an independent investigation, called by VW, was in progress.

Analysts also believe that as the scandal escalates, Ferdinand Piech, the head of VW who has given Mr Lopez firm backing, may also be forced to step down.

Investigators who raided VW's Wolfsburg headquarters last Thursday say they have picked up useful information even though the suspects probably knew of the raid in advance. Yet it is hard to know whose faces were reddest when the police swooped on VW. Those of Volkswagen executives - stung by the indignity of seeing hordes of state prosecutors and police swarm through company offices and managers' private houses in search of stolen General Motors documents - or those of the state prosecutors, who were obliged to concede that the mass raid had been anything but a surprise.

That much was clear from the three television crews waiting outside the gates of VW's headquarters to film the secret arrival of the 20 prosecutors, backed up by 40 plain-clothes police and computer experts.

A fortnight before the Frankfurt Motor Show, VW's public relations' nightmare has gone from bad to worse. As investigators rifled through the office of Mr Lopez, VW's number two and the man at the centre of the industrial espionage suspicions, VW announced a DM1.6bn ( pounds 640m) pre-tax loss for the first half, compared with a DM445m profit in the first six months of 1992.

The company's share price was not helped by speculation from Mr Piech that there may be no dividend this year and that extraordinary second-half earnings would be needed to meet the break-even target.

By Friday afternoon, boxloads of papers, computer disks and PCs were on their way from Wolfsburg to the state prosecutors' office in Darmstadt. But although the raid appears to have ended successfully, it began in high farce. Word about the carefully planned operation had got out via careless talk by a police officer, since suspended from duty. At a local shooting club meeting, he said he could not be free on Thursday since 'we'll all be at VW' and this reached unintended ears.

On Tuesday, VW's press department received a phone call from someone offering a 'hot tip' in return for DM500,000. VW informed the police. Two men - said to be from the Frankfurt's red-light district - were arrested the same night as they prepared to meet VW officials at a motorway service station.

VW, insisting that it had not learned of the raid beforehand, voiced concern about the 'impression of stage-managing for Reality-TV, which cannot help the cause of justice'.

(Photograph omitted)