22 September 2015

Michael Horn the chief executive of VW in the United States will not have enjoyed “eating crow” last night when admitting that “Our company was dishonest with… all of you… we have totally screwed up.”  The admission that VW engineered its diesel motors to deceive emission testing regimes is extraordinary in its enormity.

VW promotes itself as a leader in corporate responsibility. Deceiving a regulator in this way blatantly conflicts with three of VW’s ethics principles – although perhaps the admission conforms to the fourth:

  •   we act responsibly, for the benefit of our customers, shareholders, and employees;
  •   we consider compliance with international conventions, laws, and internal rules to be the basis for sustainable            and successful economic activities;
  •   we act in accordance with our declarations; and
  •   we accept responsibility for our actions.

VW specifies that its Code of Conduct provides “a guidepost that supports employees… in mastering the legal and ethical challenges… in their daily work. The Code of Conduct constitutes a Group-wide guideline that applies to all of our employees and members of executive bodies and for the compliance with which each individual is equally responsible.”

Manipulating US exhaust controls with technology that falsifies emissions data suggests the code is an enormous hypocrisy.  Thousands of VW employees must be familiar with the device, its design, purpose, manufacture, installation, and maintenance. If the code provided a guidepost for mastering ethical challenges, it cannot have shown the way for those employees. The company must have been selective in the ethical behaviour expected of them.

This disclosure doesn’t reflect the VW values of –

  • closeness to the customer
  • superior performance
  • value creation
  • renewability
  • respect
  • responsibility
  • sustainability

If VW operated in this way, there must be a possibility that other makers did likewise.  Competitors would have become aware of systems needed to replicate VW results and maintain market share. There will have been movement around the sector of those “in the know”.

VW produces about 13% of new cars.  It is Europe’s largest car manufacturer, making about 25% of the Continent’s cars. Its 2014 profits exceeded 10 billion euros. Those profits are likely to be dramatically reduced as the emissions scandal plays out.  A prosecution in the United States is reported to expose VW to a potential fine exceeding US$18 billion!

As so often happens when prominent personalities are caught cheating there is a public moment of apparent regret.  Then recognising that their trustworthiness is evaporating, the promise to change.  VW we were told is “… committed to do what must be done and to begin to restore your trust.”

Mr Horn must be wondering – as did the writer of the Gospel of Mark  “For what shall it profit a man to gain the whole world and lose his own soul?”