The Hindu Business Line : AP to seek CBI probe into deals over Volkswagen

TO CLEAR THE AIR: The Andhra Pradesh Chief Minister, Dr Y.S. Rajasekhara Reddy, and the Major Industries Minister, Mr Botsa Satyanarayana, at a press conference in Hyderabad on Thursday. — K. Gajendran

Hyderabad , July 14

THE Andhra Pradesh Government has decided to seek a probe by the Central Bureau of Investigation to clear the air surrounding investments into Vashishta Wahan (P) Ltd, a special purpose vehicle created for the proposed Volkswagen greenfield car plant in the country.

The Chief Minister, Dr Y.S. Rajasekhara Reddy, said: "As a responsible democratic Government, we think that it is in the fitness of things that the whole issue be investigated by an independent agency at the highest level and clear doubts surrounding investments into the project."

Addressing a press conference here today, Dr Reddy said that the State Government, as an equity partner, had decided to invest 5 million euros (about Rs 28 crore) in the SPV. This would have amounted to 2 per cent of the project's equity. Of this, about 2 million euros (Rs 11 crore) was deposited with HSBC.

Referring to the investments, Dr Reddy said Andhra Pradesh Industrial Infrastructure Corporation Ltd, on the advice of solicitors, authorised HSBC to release Indian currency equivalent of 2 million euros towards equity share capital of VW AG's nominated Indian company Vashishta Wahan.

The company, on June 22, communicated in writing to the Government that Dr Helmut Schuster resigned from the company on June 15, following two weeks of sustained exposures on bribery surrounding new projects of Volkswagen, and named a new team to handle their India project henceforth.

Dr Reddy replying to queries said: "As an optimist, I am confident that the carmaker would set up its plant in India, since in the same letter, Volkswagen informed about their continued strong interest in the project in AP."

This car project, which had stiff competition from other States, including Tamil Nadu and Maharashtra, is a near three-year saga. In January, VW's legal representatives visited Hyderabad to finalise the contents of the memorandum of understanding, which contains details of concessions and facilities offered by the State Government for the project in Visakhapatnam. On May 3, the Volkswagen legal chief conveyed the finally agreed draft MoU. On June 20, the board of the company was expected to clear the business plan, Dr Reddy said.

A joint protocol was signed between the Volkswagen team, comprising 10 members, including Mr Schuster, and the Andhra Pradesh Government, he added.

However, the developments following Dr Schuster's resignation meant that Andhra Pradesh would have to deal with a new team formed by the German company. The carmaker had initially planned an assembly line, but expanded the scope of the project and investments to about Rs 5,000 crore, Dr Reddy said.

Former Chief Minister Mr N. Chandrababu Naidu, who was actively associated with the car project, said that the State Industries Minister should be sacked and the probe scope expanded to several people associated with the SPV.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Ahead of US visit, industry captains meet PM

Gecis to acquire US-based Creditek

Finance Ministry to come out with clarifications on FBT soon

Mobile is lost but info stored is intact, thanks to Bhatia

AP to seek CBI probe into deals over Volkswagen

AP Industries Minister to be shifted

Gold trading in demat form launched

Now, it's the turn of Korea, Taiwan investors to knock at Indian doors