November 29

This Day in History

Automotive

Nov 29, 1996:

Last day at VW for Jose Ignacio Lopez

On November 29, 1996, top Volkswagen official Jose Ignacio Lopez de Arriortua resigns from his job amidst accusations of racketeering and industrial espionage.

Lopez had risen through the ranks as a purchasing executive at GM, where he had pioneered what The New York Times called "the most aggressive system in the world for buying auto components cheaply." (This system, which reduced GM's costs and increased its profits, was known as the "Lopez effect" within the industry.) In 1993, Lopez—supposedly miffed because GM was not moving fast enough to build a factory, called "Plant X," that used the Lopez purchasing system—abandoned GM for Volkswagen. He brought with him more than 2 million pages of top-secret GM documents, business plans, pictures of new automobile designs and part and factory blueprints—information that, GM said, VW used to cut $450 million in expenses, eliminating GM's competitive advantage in the European market. (For his part, Lopez denied any wrongdoing. "You have the right to take your ideas away with you," he insisted, though in fact intellectual-property law dictates otherwise.) In mid-November 1996, VW opened a new factory in Resende, Brazil that seemed to be based on the purloined plans for Plant X.

For three years after Lopez left GM, the American auto giant had been trying to get VW to oust Lopez and to apologize for his theft, with no success. Lawsuits accused Lopez and VW of espionage, racketeering and copyright infringement. Finally, in hopes that its rival would settle its suits out of court, VW announced that Lopez would resign. However, his resignation did not stop the criminal investigations against him. Within weeks, prosecutors had filed criminal charges in German and American courts.

In January 1997, VW agreed to pay GM $100 million, and to buy $1 billion worth of auto parts from the American company between 1997 and 2004. While they admitted no wrongdoing, VW executives also issued a statement that conceded what they called "the possibility that illegal activities" might have taken place.

In 1998, a German court fined Lopez $280,000 and dropped all criminal charges against him. In 2001, the Spanish high court refused to extradite him to the U.S. for trial.

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