What do Lance Armstrong and Volkswagen have in common? For one thing, both were involved in largest scandals in their respective spheres: Armstrong in cycling, and Volkswagen in car manufacturing. Yet, the similarities go even further. The Man from FCPA was intrigued when he came across a recent New York Times article, reporting on a New York state lawsuit against the German auto manufacturer. It was not the cheating which tied the company to Armstrong, it was the years of very public denials and criticisms of any person or institution which raised questions.
The New York lawsuit alleges that VW began its fraudulent conduct as far back as 2004, in its Audi unit, which was then headed by current VW chief executive Matthias Müller. The scam to deceive both emissions testing and even acoustic testing began at that time. However in 2014, when engineers at West Virginia University published a study raising the emissions-testing issue, the company went into full Lance Armstrong attack mode on several fronts.
According to the New York Times, Volkswagen went on a 17-month effort to confound regulators with misleading information. Case in point: in a 2014 conference call with California regulators, VW officials used what the suit called “phony technical explanations for high emissions.” But it did not stop there as even a VW management board member, Christian Klinger, who asked questions and made requests for information about the study, had to leave the company.
VW also went into full panic mode as the regulators began to ask for more information. The article cited one company executive, who when “facing questions from suspicious California officials, wrote to co-workers, “Come up with the story, please!” Indeed, in the summer of 2015, when the Environmental Protection Agency basically told the company that it had to fess up and admit the issue or the EPA would go public; VW did not respond. Even after the EPA made its public announcement, VW sat on its collective hands until finally admitting the fraud.
The lesson from Armstrong and VW is that cheaters, whether they are in the world of cycling or that of auto manufacturing, will eventually get caught. The filing of the state of New York law, now joined by Massachusetts and Maryland, opens up a new front in VW’s continuing, self-inflicted nightmare.