View from Frankfurt: Volkswagen's visionaries face the precipice

It would be hard to find men less alike than the duo struggling to turn around that battered colossus of German industry, Volkswagen.

The Austrian-born chairman, Ferdinand Piech, is part of the grand Porsche family. He is a quiet man of substantial wealth who finds it hard to look people in the eye. He speaks in a soft monotone, with the verb at the end of each sentence coming after a seemingly interminable pause.

His number two at VW, by contrast, is the charismatic Spaniard, Jose Ignacio Lopez de Arriortua, who has clawed his way up from more modest origins. His bulging eyes, tireless hands and rapid speech convey a sense of permanent excitement. The two men are driven, however, by similar obsessions: cars and beating the Japanese.

The lives of Mr Piech and Mr Lopez appear to be reduced to a simple, stark challenge: us or them. Volkswagen is to be the vehicle for this final conflict, in which victory would mean restoring greatness to Europe. History, however, has opted for a different course.

As the onslaught by General Motors and its European subsidiary, Opel, gathers pace against suspected industrial espionage by several of its employees who switched to Volkswagen, Mr Piech has defiantly linked his fate to that of Mr Lopez. Again it is us or them, except they are the Americans, not the Japanese.

Should GM succeed in nailing Mr Lopez on any charge of document theft, Mr Piech has left little doubt that he will go too. The duo entrusted with forcing a cultural revolution at Volkswagen will have fallen, with incalculable consequences for Europe's leading car maker.

By the boxload

General Motors' case against Mr Lopez and some of those close colleagues who followed him to VW is threefold. First, in the months preceding their departure, they allegedly collected a lot of internal material, some of it top-secret, and much of which had little to do with their jobs. And when GM says a lot, it means for example some 90,000 computer printouts of component prices. Hence the suggestion that the material - which allegedly concerned Opel's entire model, advance-purchasing and development programmes to the year 2003 - was carted away by the boxload.

Second, GM claims that after Mr Lopez and his colleagues left, none of this material could be found. And finally, GM suspects that Mr Lopez did not suddenly decide to switch to VW on 9 March, as he claims, but may have planned his departure well before. If this were the case, the collection of material would assume an altogether different significance.

GM has launched a twin-pronged assault by means of the state prosecutors in Hamburg and Darmstadt. The Hamburg prosecutor is investigating possible perjury by Mr Lopez and some of his colleagues. During a recent civil court hearing brought by Der Spiegel news magazine to lift a gag imposed by Volkswagen, a number of GM employees gave evidence that directly contradicted sworn statements by Mr Lopez.

Mr Lopez had denied having anything to do with an emotional declaration of love and loyalty for GM that he was due to give on 15 March but never did, as he left just hours before for VW. Mr Lopez said the speech was written by GM's public affairs department. But his former press aide, Toni Simonetti, read to the court from her detailed, original notes apparently dictated by Mr Lopez. And she showed a typed draft, with more than 20 corrections apparently in Mr Lopez's handwriting. This was hardly explosive stuff, but it provided the first suggestion that VW's intended saviour may have been economical with the truth.

There followed more significant contradictions. Mr Lopez denied asking for and receiving photographs of Opel's Vectra model, due to come out in four years. GM executives gave evidence that he did. Mr Lopez said he only remembered getting four or five charts at an Opel international strategy meeting in March. A GM witness said he personally gave Mr Lopez a 150-page sheaf of documents on future model and production programmes.

The Hamburg prosecutor is now trying to establish who is lying. Finding evidence contradicting the sworn statements by Mr Lopez and Mr Piech that they were in agreement about the former's switch to VW only on 9 March could be the most difficult task for GM.

Its case appears to rest on two factors. The first is that Mr Lopez said he suddenly decided to leave GM on 9 March, the day he signed the VW contract, upon learning that GM did not intend to realise his plan for building a revolutionary lean-production car plant in his native Spain.

GM claims to have a letter, drafted by Mr Lopez on 14 January, informing the consortium of Spanish investors behind the project that it was off. The next day Mr Lopez, who had already been talking to Mr Piech, had the first of several meetings with Jens Neumann, VW's board member in charge of personnel.

Early notice

The second element concerns a detailed article on the new VW management team in the March edition of the German magazine Top Business. This article was sent to the printers in late January, after having been shown for comment to VW's spokesman. Does this imply that in January VW approved this article and therefore the statement that Mr Lopez had been chosen as the company's new production chief?

While the Hamburg prosecutor's office is sifting the evidence for perjury, its counterpart in Darmstadt is leading the second prong of GM's assault, focusing on four boxes of internal GM and Opel documents found in a flat in Wiesbaden occupied by two former employees who followed Mr Lopez to VW.

On the strength of evidence from GM employees, the Darmstadt state prosecutor said the boxes contained some sensitive material, including details of Opel's small car project for the second half of the Nineties. The prosecutor also stated that some of the material was identified by GM employees as having been produced at Mr Lopez's request.

Volkswagen was quick to point out that none of the documents were found on its property, and suggested that GM may have planted the material. It appears that the boxes were not seized in the flat by the police, but found their way to the prosecutor by an unknown route. The Darmstadt prosecutor ruled out any question of tampering, saying it was sure of its case, but would not say why.

When asked what assurances he had received from Jorge Alvarez and Rosario Piazza, the two former Opel employees who had occupied the flat, Mr Piech replied that they took nothing to VW and had no intention of taking anything to VW.

Both prosecutors should finally have the opportunity next week to begin questioning Mr Lopez and his colleagues upon their return to Germany after VW's holiday ends. This could hardly come soon enough.