Indian minister says VW must return EUR 2m

12th July 2005, Comments 0 comments

12 July 2005, NEW DELHI - The government in the southern Indian state of Andhra Pradesh has insisted that a EUR 2 million payment it claims to have made to German auto-giant Volkswagen must be returned if the firm has decided against setting up a manufacturing plant in the state, news reports said Tuesday.

12 July 2005

NEW DELHI - The government in the southern Indian state of Andhra Pradesh has insisted that a EUR 2 million payment it claims to have made to German auto-giant Volkswagen must be returned if the firm has decided against setting up a manufacturing plant in the state, news reports said Tuesday.

The German company has already distanced itself from the controversy, denying it has been paid any money and insisting it has yet to decide on setting up a plant in Andhra Pradesh.

The main opposition party, the Telegu Desam Party has meanwhile turned up the heat on the ruling Congress party, demanding a probe into alleged kickbacks by the state government to Volkswagen's sacked executive Helmut Schuster and his Indian associate Ashok Jain.

The Asian Age reported that the state government paid Delhi-based investment firm, Vashishta Wahan, EUR 2 million, despite allegedly being aware that it was not dealing with Volkswagen but a company set up by Jain, a former Volkswagen chief advisor in India.

The firm apparently adopted the same acronym as the German company, VW, in an attempt to masquerade as Volkswagen's Indian arm.

While Volkswagen has said it has nothing to do with the Delhi-based VW, the state Industry Minister Bosta Satyanarayana admitted that the government paid Volkswagen the amount to set up the plant in the state.

Satyanarayana said everything was done in a legal and transparent manner, but declined to comment on reports that the payment was made to Vashishta Wahan.

In January, the state government received a letter on VW letterhead from Schuster saying Volkswagen had approved the project as a joint venture with the government.

Schuster sought the transfer of EUR 2 million to a "company affiliate", Vashistha Wahan.

Schuster, who was negotiating with the Andhra Pradesh government for nearly a year, allegedly on behalf of Volkswagen, was recently sacked because of his involvement in a bribery scam.

DPA

Subject: German news

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