The Hindu : Front Page : Volkswagen's payment rejected

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Wednesday, Sep 07, 2005

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Volkswagen's payment rejected

Special Correspondent

German car major's bid to cover damages caused to State Government

DAMAGE CONTROL EXERCISE: Major Industries Minister J. Geeta Reddy with Volkswagen's representative Frank Elbe in Hyderabad on Tuesday. - Photo: Satish H.

HYDERABAD: The Andhra Pradesh Government on Tuesday refused to accept a demand draft for Rs.11.67 crores from Volkswagen AG representative, Frank Elbe, citing that the CBI enquiry was in an advanced stage. Mr. Elbe met the Chief Minister, Y. S. Rajasekhara Reddy, and sought to hand over the draft.

Soon after meeting Dr. Reddy, Mr. Elbe told waiting reporters that he had come here to hand over the `cheque' covering the damages the Government had suffered by paying Rs.11.67 crores to a company " which turned out to be fake".

He said the Chief Minister, in a "very noble gesture", refused to accept it on the ground that the Central Bureau of Investigation (CBI) was investigating the matter. Dr. Reddy informed him that a large part of the money was already recovered. The Chief Minister appreciated the Volkswagen's gesture in accepting moral responsibility for the damage.

Mr. Elbe said that he had also extended an invitation to the Government to send a delegation to Volkswagen's headquarters in Germany. The visit was likely to be on September 28, the Government said.

Later, the Chief Minister said he had refused the money to ensure transparency and referred to the assurance given by him in the past that money would not be lost. It may be recalled that the Andhra Pradesh Industrial Infrastructure Corporation had released Rs.11,67, 40,0000 towards equity share capital to Vashistha Wahan Private Ltd. on behalf of the Government.

Dr. Reddy said the Government was more interested in bringing the car project to the State, and stressed that it was essential to find out who committed wrong in the whole episode--whether it was Helmut Schuster, the officials or the Ministers as alleged by the Opposition.

An official press release explained that the APIIC had released the equity amount on the written instructions of Mr. Schuster, the then Country Head of Volkswagen India Project.

It recalled that Volkswagen later conveyed through a letter that Mr. Schuster "acted in excess of his authority and misled the Government of Andhra Pradesh on the issue of Vashistha Wahan Pvt Ltd.".

It was later followed by the visit to the city by Mr. Elbe to convey the company's continued strong interest in the car project in Andhra Pradesh and convey concern over the damage caused to the State Government.

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