Step 1 in the playbook for a company accused of misconduct is a promise of complete cooperation with the government. Step 2 is the key, because the company must then conduct a thorough internal investigation that will deliver the information necessary to assure regulators and prosecutors that the problem has been dealt with and those responsible have been identified.
It is the second step that seems to be tripping up Volkswagen these days. The automaker is offering a type of amnesty to some of its workers who provide information that the law firm Jones Day needs to respond to multiple inquiries into how vehicles avoided emission standards in the United States and Europe.
Without information that identifies who was responsible and whether senior management was aware of the violations, Volkswagen will be left looking like it was unwilling to fulfill its promise of cooperation. That is almost sure to bring down the wrath of the Justice Department, which identifies complete disclosure of wrongdoing as the cornerstone of its assessment of whether to file criminal charges against a company.
The story out of Volkswagen certainly has shifted since the Environmental Protection Agency issued a notice on Sept. 18 that the company installed a “defeat device” in vehicles equipped with 2-liter diesel engines designed to circumvent emissions tests in violation of the Clean Air Act. A second notice of violations on Nov. 2 covers Porsche and Audi vehicles with a 3-liter diesel engine, which Volkswagen has denied.
Initially, the software used to fool the emissions tests was described as “irregularities” in the resignation statement of its former chief executive, Martin Winterkorn, just a few days after the first E.P.A. charges.
“I am stunned that misconduct on such a scale was possible in the Volkswagen group,” he said, implying that it was a conspiracy of a small group of rogue employees.
Michael Horn, the chief of the company’s American subsidiary, told Congress a few weeks later that the defeat device was the work of “a couple of software engineers who put this in for whatever reason,” an explanation he acknowledged was “very hard to believe.”
It turns out that explanation is more than just hard to believe. Volkswagen disclosed recently that it underreported the level of carbon dioxide produced by 800,000 vehicles in Europe, including some with regular gasoline engines, based on information provided by a whistle-blower in the company.
The company’s environmental problems seem to be expanding, making it hard to come across as cooperative when it does not appear to have a handle on the extent of the potential misconduct. If Volkswagen has any hope of producing a report from its internal investigation that shows it was cooperative, it needs to shake loose enough information to provide assurances that there are no more problems in how it complied with emission standards and other vehicle reporting requirements.
Thus, the amnesty offer asks employees to step forward to report what they know about violations on the promise that they will not be fired or face damage claims from the company. The program is open only until Nov. 30, and applies to workers covered by a collective bargaining agreement, which leaves out corporate managers.
The question is whether the pressure to provide information will work, and how quickly Volkswagen can put together a report that will satisfy regulators and prosecutors in the United States and Europe.
There is only so much Volkswagen can offer its employees to encourage them to be forthcoming. The letter from Herbert Diess, the chief executive of the Volkswagen division, pointed out that the company could not protect them from criminal charges.
(Published by The New York Times - November 17, 2015)