Volkswagen’s 11 million vehicle fraud, which released 40 times their stated nitrogen oxide emissions over years, makes me apoplectic. If you are in the compliance/ethics field, it should make you mad too.
I normally do not respond to corporate scandals contemporaneously. I have been involved in too many autopsies to jump to conclusions. Underlying the simplified headlines is almost always a complicated story, filled with tragedy, fear, loss and other Shakespearean human emotions and frailties.
In most scandals, a person or a few people or a team make a mistake. Sometimes well-intentioned, sometimes due to sloppiness or incompetence and sometimes out of greed or willful wrongdoing. And then this magnifies, builds, is detected, is covered up and eventually leaks out. Think about the wrongdoing you know about, and see if it fits this pattern.
Ethics and compliance professionals can play an important role in preventing this kind of scandal or detecting and addressing it early.
But the Volkswagen fraud? Eleven million cars over at least five years? This is systemic. It involves the core of their business. In an engineering company. A German company known for its controls.
What could a compliance officer have done in this situation? Talk about an untenable position.
As a University of Chicago economics and business graduate, I have always believed in the power of the marketplace. I have believed that businesses would, for the most part, self-regulate, especially in the internet age when there are no secrets and reputations matter more than ever.
Volkswagen is a powerful counter-argument. Were it not for some creative and zealous regulatory work by the U.S. Environmental Protections Agency and the California Air Resources Board, Volkswagen diesel engines could have been fooling us for years.
Volkswagen was neck and neck with Toyota in the race to sell the most cars globally. Now their necks are under the blade of the guillotine. A smaller company would be executed as a result of this systematic wrongdoing. Volkswagen, Audi and the Porsche family of automobile companies will be lucky to escape.
We know from history that we have an almost infinite capacity for doing stupid things. The wisdom of organizations and their ethics/compliance officers is supposed to lessen the frequency and magnitude of these mistakes. Volkswagen reminds us we have a long, long way to go. And in so doing, further undermines trust that consumers and citizens have in the companies we buy from.
Steve Priest was described by the Wall Street Journal as “one of the most sought consultants to keep companies on the straight and narrow.” Prior to his recent creation of Integrity Insight International, Steve founded and ran the Ethical Leadership Group, an ethics consulting firm that he sold to Global Compliance in 2007 (now NAVEX Global.)
