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VW chairman accuses GM of trumping up industrial espionage charges


BONN, Germany -- The high-stakes international battle between Volkswagen and General Motors escalated yesterday, as beleaguered VW Chairman Ferdinand Piech accused the Americans of trumping up charges of industrial espionage in a smear campaign against the star executive he lured away from GM.

Publicly answering allegations by GM and its German-based Adam Opel AG unit for the first time since the scandal erupted four months ago, Mr. Piech claimed that Volkswagen tops a "European auto hit-list" allegedly kept by the Detroit automaker -- a charge GM brusquely denied.

Despite pressure from the German government to dismiss VW production chief Jose Ignacio Lopez de Arriortua -- the man at the center of the firestorm -- Mr. Piech pledged his full support for Mr. Lopez.

German prosecutors are investigating GM charges that Mr. Lopez spirited away company secrets when he defected to VW in March, taking a half a dozen key GM and Opel colleagues with him.

"From my point of view, the way the American concern GM/Opel is conducting a personal campaign of revenge against Dr. Lopez is intolerable," Mr. Piech told reporters. He accused GM of "misusing the state prosecutors, the media and the public to sully our company."

Mr. Piech, whose struggling company is Europe's biggest car maker, attempted to rally European competitors to VW's side, warning close rivals Fiat and Peugeot that they could be targeted next "if the GM war against Volkswagen is lost."

Hinting that VW may sue GM for slander, he declared: "I do not see a peaceful end to this conflict."

Opel quickly retaliated with an acidic denial, accusing Mr. Piech of stooping to "an astonishingly low level" in the battle between the two auto-making giants. Opel dismissed his statements as "fully without substance" and scheduled its own news conference for this morning.

So far, the scandal has spun off three separate cases in Germany, including an unsuccessful bid by VW to muzzle the country's most influential news weekly, Der Spiegel, which has published several investigative pieces about the affair.

Opel won a court order in April barring VW from wooing any more key members of its German staff, claiming about 40 had been approached. A court hearing is scheduled this fall on a GM complaint aimed at preventing seven former employees from working for VW for a year.

On the third front -- a criminal investigation of industrial espionage charges -- evidence gathered by investigators includes four cartons of confidential GM documents found at a Wiesbaden apartment leased by a former GM manager employed by VW.

Mr. Piech said yesterday that four weeks had passed between the time the apartment was vacated by the former GM employee and the day that the documents were discovered late last month. He stopped short, however, of accusing GM of planting the evidence.

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