No doubt the senior executives at Volkswagen breathed a very deep sigh of relief when the Justice Department announced its civil suit against the company for damages relating to its emissions testing fraud and attendant scandal. The suit, ironically filed in the former auto capital of the world, Detroit, sought damages for installation of the defeat device in approximately 499,000 cars here in the U.S.
The New York Times quoted, Cynthia Giles, assistant administrator for the Environmental Protection Agency’s Office of Enforcement and Compliance Assurance in the following statement, “With today’s filing, we take an important step to protect public health by seeking to hold Volkswagen accountable for any unlawful air pollution, setting us on a path to resolution.”
Unfortunately this facile statement did not seem to square with the tougher policy on individual culpability set out in the Yates Memo. In the same NYT piece it said, “given the cascade of revelations, the civil complaint, which does not involve criminal charges or auto executives facing charges, is something of a blow to the Obama administration’s highly promoted new strategy for getting tough on corporate crime. The Justice Department has gained a reputation in recent years for forcing companies to pay big fines, while sparing the executives involved. In September, Deputy Attorney General Sally Q. Yates said that impression had weakened public confidence and vowed to change it.”
Certainly the filing of this civil suit does nothing to promote the concept of individual culpability as set out in the Yates Memo. The Yates Memo, however, speaks to cooperation credit that a company may receive in a reduction of a fine or penalty through identifying culpable individuals and turning that information over the U.S. government. Perhaps Volkswagen has made the corporate decision that it will protect its employees from individual criminal liability because the scandal runs so high up in the organization.
The proposed penalty under the Clean Air Act is only $19 billion. Volkswagen may well decide that it will negotiate a settlement without receiving any cooperation credit. After all, it is only money and not jail time for senior executives who may have been part of the fraudulent scheme. GM got off with a fine only for its corporate malfeasance; will VW have the same result?