The continued fallout and effects from the Volkswagen emissions-testing scandal continue to run unabated on a worldwide basis. While not a bribery and corruption scandal, it still marks a major turning point for egregious international corporate behavior. For auto manufacturers, the scandal has led to a global dip in the sales of diesel cars, in favor of gasoline based or electric powered technologies. Perhaps this will eventually help the environment as manufacturers move toward electric powered cars. However for now, it means an increased in gasoline powered vehicles generally considered to be less environmentally friendly than diesel powered cars.

The fallout also continues from the legal perspective as several news outlets reported that former VW chief Martin Winterkorn has now come under individual scrutiny. The New York Times reported that “German prosecutors said...that former Volkswagen chief, Martin Winterkorn, is suspected of market manipulation for having waited too long to disclose that the company faced an inquiry.” This new line of inquiry is significant as it signals that German prosecutors have “begun focusing on the possible cover-up after Volkswagen learned that it was suspected of violating clean air rules.”

VW did not publicly admit it had installed the defeat device until almost 18 months after U.S. regulators began to raise questions about “suspicious emissions-testing data.” Indeed, it was not until after the U.S. Environmental Protection Agency publicly announced its allegations that VW came forward and admitted it had engaged in a multi-year fraud to under-report its diesel engine pollution testing. All of this was after Winterkorn had commissioned a report from his personal trouble-shooter on the issue.

This latest twist in the VW has The Man From FCPA wondering about the timing of information released in FCPA investigations and how much senior executives might be liable for similar conduct. For any company subject to the FCPA, this could lead the Justice Department to consider investigating companies which did not investigate allegations of illegal conduct or actively hid such allegations by stymying internal investigations. Even if the government did not consider such allegations further, it certainly could provide, as the New York Times notes, “ammunition to investors who have filed suits claiming the company violated its duty to keep them abreast of risks of the share price.”

The VW emissions-testing scandal just keeps on rolling. 

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