Parts, Pride, Profit, Patriotism And Penalty

Loyalty: All About The Bottom Line?

When it comes to crossing the line in business, no situation comes close to the scandal that hit the automobile industry in the late 1990s. The tale of espionage at General Motors and Volkswagen remains the largest ever in corporate history.

The story traces back to a proud Spaniard named Jose Ignacio Lopez de Arriorta. After a decade of effective cost cutting and dramatic showmanship, Lopez was promoted to Vice President of Worldwide Purchasing at GM in 1992.

But a mere 10 months later, Lopez defected to one of GM's cross Atlantic rivals, Germany's Volkswagen. While the defection sparked some concern and attention, Lopez maintained that he did nothing wrong, despite the fact that he had recruited several lieutenants to VW and had made off with several boxes of trade secrets.

Lopez was forced to resign from VW amid a hailstorm of lawsuits. In hindsight, Lopez defected for many reasons, one of them being that he wanted to build a plant in his native Spain. Dubbed Plant X, it was to be the most efficient auto factory in the world. While VW was receptive to the idea, GM was not.

Most corporate espionage cases are settled quietly but this one generated a great deal of attention. In the end, VW agreed to pay GM a $100 million fine and buy $1 billion worth of GM parts.

The lesson is that in life as in business, the lines are drawn clearly in the sand. If you choose to cross them on your terms with total disregard for others, expect there to be warfare. The irony is that the more valuable you are, the greater the stakes and the subsequent headaches. Even though Lopez has maintained his innocence and is revered as a corporate giant in his home country, his reputation abroad is tarnished.

But there is more to loyalty than that.