Andhra minister in a soup over car deal

Andhra Pradesh Major Industries Minister Botcha Satyanarayana finds himself in the eye of a storm over the botched attempts to bring Volkswagen manufacturing plant to the state.
 
The government had invested Rs 11 crore in a Delhi-based company, Vashisht Wahan, which claimed to be the Indian collaborator of the German car giant.

Volkswagen has now said it has nothing to do with Vashisht Wahan.

While opposition parties such as the Telugu Desam Party and the Bharatiya Janata Party have demanded Satyanarayana's resignation from the Cabinet and a Central Bureau of Investigation probe into the deal, the ruling Congress party's allies -- the Communist Party of India and the Communist Party of India-Marxist -- also have sought a high-level inquiry.

Satyanarayana, who returned to the city on Tuesday after a week-long three-nation tour, refused to meet the media.

Official sources said that Chief Minister Rajasekhar Reddy will respond to opposition allegations.

The minister was pulled up by the chief minister for making a brief statement to a Telugu TV channel while in Dubai on Monday admitting that the government had paid 2.2 million Euros to Vashisht Wahan as equity investment.

The TV channel had quoted the minister as saying that there was no wrong-doing in the deal. He claimed the money was safe and it would be returned in case Volkswagen decided against setting up its plant in AP.

On several occasions in the past14 months, Satyanarayana had claimed that Volkswagen had decided to set up its plant at Vizag and that a formal announcement would be made soon.

He had even claimed that the German carmaker had finalised a joint venture partner and a tripartite memorandum of understanding will be signed shortly.

A team of Volkswagen officials visited the state in January 2005 and the minister led a delegation to Germany for the 'final round of discussions' with the Volkswagen top-brass in May 2005.

TDP leader M V Mysoora Reddy alleged that the AP government, through the AP Industrial Infrastructure Corporation, paid 2.2 million Euros as equity investment to Vashisht Wahan, which was supposed to be Volkswagen's
joint venture for the Vizag plant.

The payment was made in January 2005 on the basis of a letter from Dr Helmut Schuster, Volkswagen's representative in India.

Volkswagen sacked Schuster last month following fraud and bribery allegations. Vashisht Wahan was registered in the name of one Ashok Jain who was Schuster's chief adviser in India and was sacked by Volkswagen in mid-2004.

Satyanarayana had earlier come under the cloud for taking his younger brother to Germany as part of the official delegation for negotiations with Volkswagen.

He claimed that his brother had accompanied him as the latter knew how to operate a lap-top!