MATTHEW KANDRACH – PRESIDENT, CASE

May 14, 2018 – https://bit.ly/2rCttE2

The recent Department of Justice indictment against former Volkswagen Chief Executive Martin Winterkorn for conspiracy and wire fraud is another clear indication that VW is far from putting its “diesel-gate” scandal in the rearview mirror. The charges provide strong evidence that wrongdoing went right to the top.

Of course, as everyone now knows, Volkswagen pleaded guilty last year to several counts of fraud after it was caught rigging its diesel engines with “cheat switch” software to beat U.S. emissions regulations. The device was surely ingenious, but not exactly the innovative “German engineering” its customers had in mind when they made their purchase.

Volkswagen was fined $4.3 billion in civil and criminal penalties by the Department of Justice and was forced to buy back hundreds of thousands of rigged vehicles from its customers. In the U.S., more than 300,000 buy-back diesel vehicles sit on 37 remote locations across the country.

Volkswagen would like to get those vehicles back on U.S. roads ASAP. But given its recent track record, ongoing legal issues and refusal to come clean on its current practices, maybe it’s time we hit the brakes on that idea until we get some real answers, and VW stops acting like it has something to hide.

And to an uncomfortable degree, it still avoids requests for transparency. VW refused to cooperate with a request by the House Committee on Science, Space and Technology to provide documents regarding current emissions testing technology or fixes to get its diesel engines in compliance with E.U. emissions standards. A spokesperson for VW said “the committee appears to be seeking information outside its jurisdiction, including about diesel vehicle emissions and repairs in other countries.”

The committee considered this an important threshold for transparency and plans to hold hearings in June. In a letter to current CEO Herbert Diess from committee Chairman Lamar Smith (R-Texas) and Rep. Dana Rohrabacher (R-Calif.), they noted they had “obtained information from a confidential source supporting the law enforcement actions and raising concerns that VW is perpetuating this scheme in Europe and elsewhere globally.”

Indeed, raids by German authorities on Volkswagen offices and financial arms have been ongoing for over a year.

VW also said it is “not necessary” for Diess to testify at the hearings in person. With fresh indictments and ongoing police raids, Diess’ reluctance to appear before a House committee with jurisdiction over environmental and scientific research is baffling. It presents a tremendous opportunity to help put congressional minds at ease that VW is taking accountability and moving past the scandal.

And as the New York Times reported, “there have been few visible legal or disciplinary consequences for people involved in the emissions cheating” at Volkswagen. This claim has been backed up by a report by former U.S. Deputy Attorney General Larry Thompson, who is spearheading a team to oversee Volkswagen’s compliance with its criminal plea agreement. Thompson’s report suggests that, to date, there has not been a change in culture that would prevent the cheating scandal from happening again.

It’s further difficult to take Volkswagen at its word that it has turned the corner when it still refuses to acknowledge wrongdoing to the more than 60,000 customers in the U.K. who have joined a lawsuit against the automaker with the same claims of emissions cheating.

And Volkswagen’s problems aren’t just limited to North America and Europe. In the Middle East, Volkswagen is still embroiled in an alleged bribery scandal involving the distribution of its Skoda brand in Egypt. This doesn’t involve the manipulation of technical software but draws into question its current distribution and marketing practices that are hurting key U.S. trading partners.

For Volkswagen to regain its reputation and be treated as an ethical corporate citizen, it needs to prove it through action, not more promises, whether this relates to activities in the U.S., Europe or the Middle East. When we are still operating without all the facts regarding its corporate mishandlings, it’s difficult to take VW at its word that this scandal is fully behind it.

For consumers, the news is more sobering. Long gone are the days when car buyers merely had to worry about being duped by fast-talking salesmen. As the VW diesel scandal amply illustrates, companies can use technology itself to defraud.

As Volkswagen lobbies to move its mountainous inventory of used autos back onto U.S. roads, it must first prove to be fully transparent, take complete responsibility to all its affected customers, and prove beyond a shadow of a doubt that its cheating ways are behind it.