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Corporate Compliance Insights

Volkswagen Manufactures Fraud and Ignites Anger

by Steve Priest
September 22, 2015
in Uncategorized
Volkswagen Manufactures Fraud and Ignites Anger

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.


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Steve Priest

Steve PriestSteve 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.) Steve has

  • Consulted “on the ground” in 50 countries on every continent with over 25% of the Fortune 200.
  • Trained forty Boards of Directors and senior leadership teams, including Nobel laureates, CEOs and (retired) senior politicians.
  • Served as the trusted, “go-to” adviser for CEOs, GCs, and Compliance Officers when organizations are in trouble, assisting with assessments, strategies, and communications within and outside the organization.
  • Been relied upon by the Securities and Exchange Commission, the Department of Justice, the Department of Defense (US) and Ministry of Defense (UK) and other government agencies to objectively assess organizational culture and compliance programs.
  • Been approved by the government of India to conduct anti-bribery training and coaching in a sensitive case.
  • Written the most widely imitated Codes of Conduct in the world, read by millions of employees.
  • Informed and entertained hundreds of audiences with his skillful blend of facilitation and platform skills as well as conveying serious messages with a sense of humor.
Prior to founding the Ethical Leadership Group in 1993, Steve Priest was for three years executive director of the Center for Ethics and Corporate Policy, a Chicago-based ethics think tank. Priest received his ethics training both in the real world of business and inside the ivy covered walls at Harvard University’s Divinity School, where he received a Master of Theological Studies degree. He has his MBA and BA from the University of Chicago, and studied international organizational development in the Graduate Business School at the Katholieke University of Leuven in Belgium. Contact info: 312-799-9586    Steve@IntegrityII.c

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