Volkswagen may be sued for 4 mn euros

Jagdeesh Raja, who was to hold 46.5 per cent equity in the Indian venture of Volkswagen, has decided to file a suit against the German automobile maker seeking 4 million euros in damages.

The suit is slated to be filed early next week in the Delhi High Court.

"We have finalised the suit. It is ready to be filed," said D Titus of law firm Titus & Co, which represents Raja. "The grounds on which we are seeking the damages are misrepresentation and cheating," he added.

Of the damages being sought, about 2.5 million euros is given as the actual loss suffered, or money allegedly taken from Raja as expenses on project and business development. "The rest is the estimated cost of the loss in reputation," said Titus.

The suit for damages comes close on the heels of a criminal complaint filed last week by Vashishta Wahan, the joint ventuer company, on Raja's behalf against Helmuth Schuster, former director of Volkswagen's India operations, and other executives of the company, alleging fraud.

Schuster has been named a respondent in this suit too, along with liaison man Ashok Jain and some other executives of Volkswagen. "Schuster was an employee of Volkswagen and the country head of its India project. The company is responsible for his actions," said Titus.

The criminal complaint alleges that Vashishta Wahan was cheated of about 771,900 euros (about Rs 4.09 crore) by Schuster, two other Volkswagen executives, Erik Boesler and Jesko Beck, and Jain.

According to the complaint, the accused extracted money from Vashishta Wahan on the pretext that it was for promoting the Volkswagen India project and, instead, channeled it for their own use.

Schuster had resigned in June this year amid rumours that he took bribes from potential suppliers and set up companies to secure foreign contracts for Volkswagen.

The Central Bureau of Investigation is probing the allegations. Volkswagen, meanwhile, has put its plans on hold. The plant was to come up in Andhra Pradesh. Botch Satyanarayana, who had played a key role in talks with Volkswagen as the state industry minister, has been moved from his post.

Raja, a venture capitalist based in Dubai, was to hold 46.5 per cent equity in Vashishta Wahan through his company Celestial Overseas Ventures Ltd. Volkswagen was to hold 51 per cent and the Andhra government a nominal 2.5 per cent for 5 million euros.

The state government, through AP Industrial Infrastructure Corporation Ltd, deposited 2 million euros (Rs 11.66 crore) on January 13 this year as its initial contribution.

According to Raja, Schuster, Erik Boesler (a Volkswagen executive) and Jain decided to shift the entire amount to their own account immediately. Schuster directed Raja to remit the entire amount to one EE Trading in Dubai.

Finally, Raja says he remitted 656,100 euros.