Newsmaker: Botcha Satyanarayana

High flying minister hits a roadblock

Botcha Satyanarayana

A few days ago, Botcha Satyanarayana was basking in glory in his role as the Andhra Pradesh minister for major industries. He would often tell people how close he was to convincing Volkswagen, the German automobile giant, to set up a manufacturing unit in the state.

"We have the ambition to have the Volkswagen unit in our state," he had told Business Standard.

Ironically, the same man had to request Chief Minister YS Rajasekhara Reddy on Thursday to change his portfolio and seek a CBI probe into the Volkswagen affair.

The Andhra government had paid 2 million euros as part of its equity to Vasishta Wahan, purportedly the Indian arm of the German company, to clinch the Volkswagen deal. The amount is untraceable today. Left with no choice, the state government has asked the Centre for a CBI probe in the matter.

An arts graduate, Satyanarayna climbed the political ladder steadily. He had joined the Congress as an ordinary worker in 1980. When Reddy came to power last year after defeating N Chandrababu Naidu, Satyanarayana was made the minister for major industries. The Volkswagen episode is the first major setback he has faced in his maiden stint as a minister.

In its anxiety to secure the Volkswagen project, the state government had asked the Andhra Pradesh Industrial Infrastructure Corporation (APIIC) to release the money to Vasishta Wahan.

This was sought by Helmut Schuster, who was the head of the Volkswagen's India project then. Schuster resigned from Volkswagen last month, following the German company's investigation into allegations of bribery and kickbacks against its top officials.

But why did the state government break the rules to comply with Schuster's demand? Satyanarayana said it was not his fault. The officials, who had to follow the rules and procedures in releasing the money, failed in their duty. The money was said to have been paid by the state-owned APIIC even before Vasishta Wahan had completed incorporation formalities.

Satyanarayana first came to know that the money released to Vasishta Wahan was being withdrawn when he visited Germany two months back to hold discussions with Volkswagen executives about the India project. Then, Schuster had told him that Volkswagen was keen on locating its project in Andhra.

"If Schuster would have been in Volkswagen today, we could have got the project by now," Satyanarayan said after the lid got blown off the controversy.

When the vernacular press came out with reports last week that all was not well with the government's deal with Volkswagen, Satyanarayna was in Dubai. He had to cut short his visit and return to Hyderabad to face the raging controversy.

Satyanarayana said the decision to release money to Vasishta Wahan was taken collectively by all concerned with the deal. It was taken after Schuster conveyed in writing to the state government that Volkswagen had decided to set up the project at Visakhapatnam, and that the state government "may consider to take nominal equity position to affirm its commitment".

Schuster had also informed in writing of the details of the new company formed and its bank account, and provided other prices of information, with a request to release equity to the newly-formed Vasishta Wahan.

The government claims that it had secured expert legal advice and also made discreet enquiries with the German Embassy before releasing the money to the "newly-formed Indian company" of Volkswagen.

However, the facts are that the money had been withdrawn, and that Schuster, who sought the money, had resigned from Volkswagen, and the German company has, so far, not acknowledged that Vasishta Wahan is its entity.

Satyanarayana is confident that he will come out clean once the CBI completes its investigation. But, as of now, it looks that the controversy has him on the mat.