Friday, July 22 2005 15:18 Hrs (IST) - World Time -

Berlin: German carmaker Volkswagen AG will pay Andhra Pradesh Government nearly Euro 2 million (USD 2.4 million) in damages suffered due to the illegal actions of a former manager at the center of bribery in a scandal.

Volkswagen said in a statement yesterday (July 22, 2005) that the payments were compensation for losses incurred by Andhra Pradesh, following the allegedly illegal actions of former Skoda board member Helmuth Schuster, who resigned on June 15.

Schuster, who is under investigation by German prosecutors, deceived the state of Andhra Pradesh by acting without authority, by demanding payments for setting up a factory in India.

Volkswagen said it was investigating the situation and asked Indian authorities for help in finding anyone involved in the affair.

The move is the latest in a widening scandal that has triggered the resignation of several top managers, including the former Personnel Chief Peter Hartz, one of Germany's best-known business executives.

Earlier this month, Volkswagen filed criminal complaints against Schuster and another former employee, Klaus-Joachim Gebauer, who was fired from Volkswagen 's personnel department.