How should a company respond when it has a worldwide crisis that could result in civil, regulatory, and reputational liability, if not criminal liability? Should there be a uniform worldwide response? Should the response have any consistency? Can a company take inconsistent positions in different countries? What would be the effect on customers or potential customers if the response favors customers in one country yet disfavors customers in other countries? Should said company consider the potential reputational fallout? Would customers ever trust the country again?
These are just some of the questions that come to mind following a recent Wall Street Journal article that details the various global responses put forward by Volkswagen in its emissions-testing scandal response. The company has settled with U.S. regulators in quick manner. Yet it’s actively fighting regulators in other countries. Has VW set itself up to settle along the lines of the American settlement, or can it simply pick and choose where it will make restitution to its customers, dealers, and other stakeholders?
One problem for VW is that of the roughly 11 million cars sold which had the defeat device installed to defraud emissions testing, only about 600,000 were sold in the United States and subject to U.S. laws. The remaining 10.4 million are covered by other countries laws and regulations. This dichotomy is most strikingly seen by the position taken by VW in Australia where, Volkswagen’s attorneys “denied the existence of illegal software to manipulate emissions. VW’s counsel told a court, “There is no defeat device. That is our case.” In Europe, the company “has denied that its customers have suffered any damages.”
The VW emissions-testing scandal will be a groundbreaking case for many years to come. Uniformity in settlements may now be set with the highest settlement or resolution. Conversely some company could run to a less than developed jurisdiction, reach a resolution and then claim that should be the baseline. It will be most interesting to see how it all plays out.
Continue the conversation at Compliance Week Europe: 7-8 November at the Crowne Plaza Brussels. Join us as we look at changes in global anti-corruption regulations, slave labour risks in your supply chain, and how to detect fraud, to name just a few topics. Click here to learn more.