The Hindu Business Line : AP getting back money from Volkswagen

THE Andhra Pradesh Government is set to get back 2 million euros (about Rs 11.67 crore), with the German automotive major Volkswagen AG deciding to account for the illegal withdrawals made by its former employee. The carmaker also expressed interest to enter the Indian automobile market.

Mr Thomas Mickeleit of Volkswagen has communicated the company decision to pay up the funds and continue investigations to the State Principal Secretary, Industries, Ms Lakshmi Parthasarathy, in response to the latter's e-mail.

This development follows concerns expressed by the Andhra Pradesh Government over alleged siphoning of funds by Dr Helmut Schuster, former Skoda Board member, and the man entrusted with Volkswagen India plans. The Government has already ordered an enquiry by the Central Bureau of Investigation into the matter.

Volkswagen has been hit by bribery charges relating to new projects, including the proposed Indian car plant. It led to the resignation of Dr Schuster, who was heading the India Project.

Volkswagen, in an e-mail response to Business Line said "according to present findings, Dr. Schuster acted in India without authority and furthermore misled the State of Andhra Pradesh. With respect to payments to Vashishta Wahan (a special purpose vehicle) arranged by Andhra Pradesh, the Volkswagen group will assume responsibility for the damage caused amounting to just under two million euros."

While reiterating its interest in entering the Indian market, Volkswagen has clarified that the group will, however, call to account those responsible for the damage both inside and outside the company. The group is counting on vigorous support from the Indian authorities.

The German company said Volkswagen does not hold and never has held an interest in Vashishta Wahan, originally set up as a project company that was to have been responsible for building a factory in India. This would have followed an investment decision by the board of management, which is still pending.

Meanwhile, the Chief Minister, Dr Y.S. Rajasekhara Reddy, speaking on the sidelines of a district collectors' conference, said, "The issue of funds was not something the Government was concerned about. We are confident about securing it back. In fact, we are very keen to ensure that the car plant is located in India."

Later, a senior State official said, "The media here had played a big role in the way the issue was blown out of proportion. While Volkswagen has communicated to the State about the payment of funds through an e-mail, we are keen to see that the factory is located in the State. Even as we await the hard copy of the company communication, we expect to send a team to hold discussions about the proposed plant."

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