CBI charges Volkswagen ex-official, five others for fraud (Second Lead)

HYDERABAD - The Central Bureau of Investigation (CBI) Saturday formally filed charges against six people, including a former Volkswagen executive Helmuth Schuster, in a case of defrauding the Andhra Pradesh government but gave a clean chit to a state minister.

The investigating agency, which took up the probe in 2005, filed the 150-page charge sheet in the CBI court here. It examined 59 witnesses.

The name of state Panchayati Raj Minister B. Satyanarayana, however, did not figure in the charge sheet. He was then holding the industries portfolio and the opposition had alleged his involvement.

The 56-year-old Schuster is on the run since the scam broke, and has been placed on the wanted list of the CBI. An Interpol notice was issued against him in 2005.

The other accused include Volkswagen’s former India representative Ashok Jain, businessmen Bhuwan Kumar Chaturvedi, Jagdish Alaga Raja, his sister Gayatri Chandravadanan, and Joseph V. George, who in collusion with Schuster, had floated a fictitious firm to cheat the state government.

The accused have been charged under sections 120B (criminal conspiracy) and 420 (cheating) of Indian Penal Code, CBI official S. Venkatesh told reporters outside Nampally Criminal Court complex.

The accused started Vashishta Wahan Private Ltd (the firm’s initials are VW, the same as that of the German car maker) to receive Rs.11.67 crore from the state government for setting up its plant at Visakhaptanam.

The scam hit the headlines in 2005 when Volkswagen sacked Schuster on charges of corruption in some other dealings. Schuster was negotiating on behalf of Volkswagen with the state government for setting up the car plant since early 2004 when the Telugu Desam Party (TDP) was in power.

Later, the Congress government continued the talks. In January 2005, the state government received a letter from Schuster. Typed on the Volkswagen letterhead, it confirmed that the company was going ahead with the project.

For a joint venture with the government, Schuster sought transfer of 2 million Euros to Vashishta Wahan, which he claimed was the Indian arm of Volkswagen. The Andhra Pradesh Industrial Infrastructure Corporation (APIIC), a government organisation, made the payment.

Volkswagen later denied that Vashishta Wahan was its Indian arm or it received the payment.

Ashok Jain had registered Vashishta Wahan with the Registrar of Companies. He wrote to the ROC in January 2005 that he was stepping down as promoter and director. The company was later registered in the name of Bhuwan Kumar Chaturvedi of Gurgaon and Jagdish Alaga Raja of Chennai.

After the scam broke out top officials of Volkswagen had visited Hyderabad to clarify that the company had nothing to do with Vashishta Wahan. They tendered a moral apology for the wrongdoings of Schuster and offered to return the money the government paid to Schuster.

Then Chief Minister Y.S. Rajasekhara Reddy had refused to accept the money and instead urged Volkswagen to set up its plant in Andhra Pradesh.

The auto giant later dumped the southern state and choose Maharashtra for locating its unit.

The CBI carried out investigations in India, Germany and Switzerland by sending letters rogatory and gathered vital evidence. The agency also recovered Rs.5 crore from the accused.

Meanwhile, Satyanarayana told reporters that he was relieved at getting a clean chit. He accused the opposition Telegu Desam Party of indulging in character assassination by making baseless allegations against him.