Tuesday, September 6 2005 15:34 Hrs (IST) - World Time -

Hyderabad: The Volkswagen car scam in Andhra Pradesh today (Sept 6, 2005) took a new turn with the German auto major offering to return to the State Government Rs 11 crore, which was allegedly swindled by its sacked India representative Helmuth Schuster, but the Chief Minister Y S Rajasekhar Reddy politely declined the offer.

"In view of the ongoing CBI inquiry into the issue, we have declined to accept the money. We are more interested in seeing that Volkswagen sets up its car plant here," Reddy told reporters after meeting the visiting Volkswagen special envoy Frank Elbe here.

In an apparent damage-reduction exercise by the European car giant, weighed down by a series of corruption scandals, Elbe called on the Chief Minister here and sought to hand over the cheque for Rs 11 crore, owning moral responsibility for the alleged fraud committed by Schuster who is now facing investigation in Germany.

The scandal pertains to the 'hurried payment' of Rs 11 crore made by the state government to a Delhi-based firm Vashisht Wahan which was supposed to be the Indian arm of Volkswagen and a Special Purpose Vehicle to execute the proposed car plant at Visakhapatnam.

The money was, however, spirited away by Schuster and his accomplices, causing major embarrassment to the Congress government which has since ordered CBI probe into the scam and shifted the Minister B Satyanarayana from Major Industries portfolio.