No answers to Volkswagen queries

Had there been no issue of financial irregularities involving Helmuth Schuster coming in the way, the project would have come to Andhra by this time," Botcha Satyanarayana maintains even on his last day as major industries minister with the same level of confidence he exuded when he last visited Volkswagen's headquarters in Germany.

But, none, including Satyanarayana, is giving straight answers to the question as to where and what went wrong that threatened the entire effort of state government to end up as a mere scandal. It has already become clear that the German company is not just investigating into the irregularities allegedly committed by Helmuth Schuster in Angolan plant alone.

In his letter(rather an e-mail message)sent to the industries commissioner Sutirtha Bhattacharya on July 11, 2005, Alfred Stroehlein, senior counsel, head of group of foreign holdings, projects and group finance, stated that public prosecutor on Braunschweig/Germany is now investigating the whole 'Schuster-case', among other things "our common Volkswagen India Project in Andhra Pradesh, because there is a suspicion of fraud and breach of trust."

The "suspicion of fraud and breach of trust" also appears to have extended to the money transactions effected by the promoters of Vasishta Wahan involving Rs 11 crore deposited by APIIC towards first installment of its proposed equity.

As former chief minister Chandrababu Naidu now argues, neither APIIC has any representative on the board of Visishta Wahan nor was the money released against issue of shares to APIIC towards its equity to release the money.

Besides, the procedural lapses that helped the siphoning off of money from the HSBC account for unknown purpose, the fraud and breach of trust alleged to have committed by Helmuth Schuster covers bigger aspects of this exercise, sources say.

According to information available in bits and pieces from the sources familiar with the developments, Helmuth Schuster appears to have kept the Volkswagen headquarter in the dark over the several aspects of the proposed Indian partner in the project.

According to sources, Schuster told the company bosses to the extent that India project will have an LCV division for which he is scouting for an Indian partner. He is also said to have assured the board that the more profitable car manufacturing operations will solely remain with the Volkswagen. He did not appear to have informed about the floating of an "Indian arm in the name and style of Vasihta Wahan" to the board for the reasons best known to him. The fate of the structure of the project thus remained unexplained.

There is a possibility that the formation of Vasishta Wahan as a special purpose vehicle or a subsidiary became known to the board only after the interaction with the Indian delegation, which must have triggered suspicion of fraud and breach of trust in the Indian activities of Helmuth Schuster.

The reference of 'abrupt delay' allegedly cropped up after the visit of the high level delegation led by B Satyanarayana in May, 2005 to Germany also indirectly confirms this.

Jagadish Raj, who is said to be a financial consultant hailing from Tamil Nadu, was roped in to Vasishta Wahan as one of its promoters, who is said to have assured Schuster of roping in Ashok Leyland for this purpose.

But the scouting for Indian partners did not end up there, which, according to some, involved with deals. Ashok Leyland is a subsidiary of British Leyland which has global ties with Volkswagen.

It is not known as to why the deal with Ashok Leyland did not materialise.