Volkswagen's Controversy: Revealed Deceitful Emissions Practices
In early September 2015, the world was shocked by the revelation of the Volkswagen (VW) emissions-testing scandal. The crisis, which has since unfolded on a global scale, has left the automotive industry in turmoil.
At the heart of the scandal is a device, installed by VW, that allowed their vehicles to meet U.S. and EU regulatory standards during testing. However, in real-world driving conditions, the vehicles emitted up to 40 times the legal limit of pollutants.
The device and the attendant corporate misrepresentations were first reported in a memo to Martin Winterhorn, VW's former CEO, by a trusted lieutenant in May 2014, 16 months before the scandal became public. Winterhorn's successor, Matthias Mueller, initially stated that VW did not lie in the emissions-testing scandal, but later had to revise his statement due to public outcry.
The fallout from the VW scandal has been far-reaching. In the U.S., VW has admitted to violating the law and has paid minor restitution in the form of credits for purchases at VW dealerships. In EU countries, however, VW has refused to admit any wrongdoing and has not offered any restitution.
The scandal has also forced other major German auto manufacturers to defend their emissions-testing protocols. The function of any compliance program is to prevent, detect, and remediate any issue going forward. Even if a compliance program has failed in the first two steps, it should be ready to move into the remediation step.
The VW crisis management has been a step-by-step process, with the company learning by actually doing. However, the truth has not yet percolated up to the top in the VW crisis, but it should. Prosecutors in South Korea are threatening to bring criminal charges against executives in VW.
The VW emissions-testing scandal is unprecedented in its worldwide scope, surpassing even the Petrobras scandal in terms of global reach. The scandal has also negatively impacted other companies, making it one of the few scandals to do so.
As the VW emissions-testing scandal continues to unfold, it is crucial for businesses to consult a qualified legal advisor before making any decisions or taking any action that may be affected by the VW scandal. The federal judge overseeing the EPA suit against VW has set a deadline of March 24 for the company to deliver a plan to remediate the emissions protocol issue.
The head of VW's Porsche division is hoping to reinstate Wolfgang Hatz, the suspended engineering chief who is seen as a central figure in the scandal. The future of VW and the automotive industry as a whole remains uncertain as the fallout from the VW emissions-testing scandal continues to be felt around the world.
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