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Saturday, Jul 23, 2005

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Volkswagen to pay damages

Special Correspondent

HYDERABAD: German auto major Volkswagen has decided to pay two million euros to the Andhra Pradesh Government for the damages caused and kept its options on the car project open.

Announcing its decision to pay the equivalent of Rs. 11.67 crores, Volkswagen AG assumed responsibility for what it called the "damage caused by the suspected illegal dealings of the former Head of Human Resources at Skoda, Helmut Schuster."

Significantly, the German company stated in a press release e-mailed to The Hindu by Thomas Mickeleit of Volkswagen AG's Corporate Communications wing from Wolfsburg on Thursday that "according to present findings, Dr. Helmuth Schuster acted in India without authority and, furthermore, misled the State of Andhra Pradesh."

A controversy had erupted following the disclosure that Dr. Schuster and his friends with whom the Congress Government was negotiating for the establishment of a VW car factory in Visakhapatnam had resigned and that prosecutors were investigating him on "suspicion of fraud and breach of trust." This was after it had paid two million euros to "Vashistha Wahan," an independent company floated for the India project, at Dr. Schuster's instance.

To its shock, the Government discovered that the money it transferred to Vashistha Wahan had been immediately siphoned off. The Volkswagen Group vowed to call to account those responsible for the damage — both inside and outside the company.

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