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Does compliance need a seat at VW’s table?

Tom Fox | July 13, 2016

When does compliance need to step forward and stand up for the reputation of a business? How about for an entire industry? I thought of those questions when considering the European reaction to the Volkswagen settlement in the United States around its emissions-testing scandal, where it agreed to pay out some $15B in fines, penalties, and compensation to affect VW car owners.

VW has offered to compensate U.S. car owners between $5,100 to $10,000 per car for VW’s fraudulent activity in installing defeat devices to fool emissions testing protocols. Yet VW has offered nothing, nada, zero, nil, zilch to its customers in Europe; its biggest market. This is one of the most tone-deaf non-concessions recently engaged in by a company which has done nothing but step on its own feet since it denied to U.S. regulators that it had installed defeat devices. Yet, the company seems to be not only completely oblivious to how it treats its largest customer base but also “could do reputational damage to the wider industry, with a knock-on effect on the reception that the sector will get when it tries to lobby the regional bloc on other issues.

Indeed the European commissioner for industry, Elżbieta Bieńkowska last week accused the car-maker of being in denial about the extent of emissions manipulation. All of this had been exacerbated by correspondence from VW CEO Matthias Müeller to Ms­­. Bieńkowska in which he said the problems with European cars could be dealt with through recalls to fix the vehicles. To even kick sand in her face further, Müeller said the cost to VW to fix its fraudulent installations of the defeat device would simply be too great for the company to bear.

While a company can stand on its technical rights, to do so is not always the right thing to do in the eyes of the consuming public. Given the tension in the EU around walking over the rights of its citizens, it will be interesting to see if the EU regulators will face up to VW and support the consuming public or simply cave in to such a craven offer by VW management.

Perhaps if VW had a real and functioning compliance department it might be able to stand up and speak truth to power.