Date:         Thu, 05 Dec 96 20:08:52 CST
Sender:       Vanagon Mailing List <vanagon@vanagon.com>
From:         Joel Walker <JWALKER@ua1vm.ua.edu>
Subject:      FYI


 Today's  Business Digest from the New York Times on the Web.

 VW Chief Steps Down; GM Calls Resignation 'Overdue'
 November 30, 1996
 By EDMUND L. ANDREWS

 FRANKFURT, Germany -- Thomas Andersson had already been unnerved once by
his two roommates, when he walked in to find they had moved in
paper-shredders and were busily destroying documents in the house they
shared in Wiesbaden, about 20 miles from here.

 When he later discovered four cartons of what seemed to be confidential
documents from General Motors in his living room, he decided to call the
police. That call, on June 21, 1993, may well have marked the beginning of
the end of Jose Ignacio Lopez de Arriortua's career as a top executive at
Volkswagen AG.

 Lopez, whom General Motors has accused of stealing thousands of secret
company documents when he left GM to join Volkswagen in 1993, resigned as
president of Volkswagen Friday. His lawyers said Lopez wanted "to
concentrate on expected legal proceedings" -- a civil suit brought by
General Motors in the United States as well as criminal charges that are
expected to be filed soon by German prosecutors.

 It remains to be seen whether Lopez, 55, will be found guilty of
industrial espionage, as General Motors has alleged. But the cartons found
in the Wiesbaden house have now led prosecutors and General Motors to
evidence of widespread secret shipments of GM documents, late-night
shredding parties and at least one big effort to transfer material from GM
floppy disks and paper documents into Volkswagen computers.

 Volkswagen executive are now showing signs of panic about the prospects of
a court trial in the United States, and are scrambling to reach an
out-of-court settlement with GM.

 A person close to VW's board, speaking on condition of anonymity, said the
company was horrified by the prospect of VW's chairman, Ferdinand Piech,
being forced to defend himself in an American court on accusations of
racketeering and industrial spying. The same person expressed the hope that
General Motors would be equally concerned about damaging its own image in
Europe.

 "This is very frightening both to GM and to us," the person close to the
board said. "We fear that unless there is a settlement, this could really
develop into economic warfare. If the discovery process and the trial goes
on, there is no question that this could lead to a very, very bad situation."

 At a minimum, the Lopez case threatens to severely wound Volkswagen's
public image, just when the German car maker is showing strong growth in
profits and sales after years of poor performance.

 The chairman of VW's supervisory board, Klaus Liesen, met with General
Motors' chairman, John Smale and a board member, Thomas Wyman, in
September, although the talks evidently made no progress. VW board members
are continuing to make informal contacts with GM on frequent basis, hoping
that the departure of Lopez will open the path to some sort of agreement.

 For General Motors, the so-called Lopez Affair has become a campaign for
corporate revenge. Lopez had been one of General Motors' most visible and
treasured stars before he quit, the man credited with revolutionizing the
way the auto maker bought its parts, sharply cutting its costs. Since
losing Lopez to its German rival, General Motors has spared little effort
to investigate, litigate and publicize what it describes as a brazen act of
corporate back-stabbing.

 On Friday, General Motors offered little sign of being willing to let
bygones be bygones.

 "The resignation of Lopez, which has been overdue for more than three
years, cannot compensate for the substantial damages," said a statement
issued by the company's Adam Opel subsidiary in Germany on Friday. The
statement accused VW's top management of a "systematic coverup" for three
years.

 If General Motors wins its suit in Detroit, Volkswagen could be forced to
pay billions of dollars in compensation. That prospect grew more realistic
on Tuesday, when a federal judge in Detroit ruled that General Motors could
sue VW under racketeering laws and claim triple the amount awarded by a jury.

 In 1993, when police responded to Andersson's call, they found a cache of
documents in the Wiesbaden apartment that included internal GM studies,
cost information and a report entitled "Strategic Business Plan Global
Outsourcing." That soon led to a sweeping search of Volkswagen
headquarters, Lopez' home in Germany and VW's guesthouse, where Lopez had
set up copying machines, shredders and a small staff to sort through papers.

 Volkswagen, which originally denied that it had obtained any information
from General Motors, now admits that it received some of that material. But
the company asserts that it had nothing to do with Lopez's efforts, that
the information did not reach VW executives outside Lopez's group and that
VW never used the information.

 However the case develops, VW will have a hard time disentangling itself
from the activities of Lopez. GM's lawsuit against Volkswagen contains a
long chronology of Lopez's activities before and after he jumped over to
the German car company.

 The documents found in the Wiesbaden apartment came directly from General
Motors, but they were only the beginning. Once German police found the
cartons, they searched Volkswagen headquarters, its computers, its offices
and the homes of Lopez and his associates.

 According to GM's complaint, Lopez had set up an elaborate
document-processing facility at one of Volkswagen's more remote offices in
Germany and installed a mainframe computer, 15 computer workstations and
other equipment to transfer data from GM disks and documents to Volkswagen
computers.

 The complaint also recounts the discovery of 20 cartons of General Motors
documents, which the company says Lopez had shipped from Detroit to Spain
at the time of his job switch. Those cartons were shipped on an airplane
owned by Volkswagen, according to the complaint.

 GM also retraced Lopez's movements on an almost daily basis between
February 1993, when he started negotiating with Volkswagen, and the time he
quit General Motors on March 10. Based largely on interviews with scores of
General Motors employees, many of whom helped prepare documents for
shipping to Europe, the complaint draws a vivid portrait of Lopez
collecting information voraciously at GM at the time he was in deep
negotiations with VW over a new job.

 Lopez, the complaint says, demanded vast quantities of information about
GM's purchasing structure, its feasibility study for a revolutionary new
factory that was code-named Plant X and even pictures of new automobile
designs.

 At one point, the complaint says, Lopez ordered GM employees to translate
large volumes of documents into German and then arranged to have those
documents shipped to Europe.

 Volkswagen denies that its top management conspired with Lopez, but the
company cannot deny that it adamantly supported the executive at every turn
in the three-year conflict with General Motors, and that it refused to back
down even after it became clear that Lopez and his followers had retained
control of a big collection of GM documents.

 Not only did Volkswagen defend Lopez, but also it used a battery of
lawyers to keep GM from taking legal action at every available opportunity.
VW unsuccessfully tried to prevent GM from pursuing its lawsuit in Detroit.
It also went to court in Germany, again unsuccessfully, to block GM from
talking about its allegations here. And most recently, it sought -- again
unsuccessfully -- to prevent German prosecutors from sharing their
information with the FBI.

 Even Friday, Volkswagen officials refrained from even hinting at any
criticism of Lopez or acknowledging any improprieties. And what GM wants,
perhaps as badly as financial compensation, is an apology from Volkswagen
and its top management. So far, that has yet to materialize.