pull the steering column cover off (its 3 screws on the bottom and 2 behind the wheel (just turn the wheel) there philips screws. Take it off and check to see if any wires are frayed or melted or blackishbrown. IF the wires are ok than you need to replace the ignition switch electrical portion.
my 95 gti's dash started on fire from the electrical harness in the steering column and fuse pannel. Then my insurance company totalled it. Good thing I bought a 01 with no wiring issues.