Breath of Clarity

Discussion Comment: VW emissions violations

Original Post by Steffen Williams:

After reviewing many sources on the so-called “dieselgate” scandal, I generally agree with the enforcement actions being taken. Financial penalties, concrete plans to fix their violations, mandates to improve the emissions on their vehicles, and criminal charges for corporate executives make up different arms of a multifaceted enforcement plan both to punish VW for noncompliance and to ensure the company moves towards compliance as quickly as possible. That being said, I think the company got off easy overall. This is largely due to VW’s status as a non-U.S. company. The U.S. government can only go so far to hold individual corporate officer’s accountable when they are not U.S. citizens and are not located in the country.

U.S. officials managed to pull in over $25 billion (non an insignificant amount) in fines from VW, yet overseas, and particularly in Germany, they paid very little for their transgressions. A myriad of court cases in Germany are looking into compensations VW may owe to shareholders for not disclosing their emissions cheating software, an act that caused many to lose significant sums when VW’s stocks fell in the wake of the scandal. No resolution looks likely soon. Additionally, while two German citizens are serving jail time in the U.S., most of the higher-level managers still sit comfortably in Germany, where German law makes them immune from extradition to the U.S. Significantly, this includes former CEO Martin Winterkorn. Winterkorn is facing charges in Germany, but recent statements by German judges indicate he may avoid jail time and is still entitled to the $12 billion in corporate benefits he received during his time as CEO.

While the U.S does seem to have done much to hold VW accountable, I wonder how they would have acted if it was a U.S. company caught cheating in this way. Knowing there is little chance of most corporate officials serving jail time, they can safely indict CEOs and others without fear of losing campaign contributions or facing other political backlash. If they instead faced the real potential of imprisoning a U.S. CEO, I am not so confident officials would have acted as strongly. Additionally, while VW may be the most aggregious cheater of emissions standards, their conduct is far from unique in the U.S., yet I have seen little appetite to hold U.S. auto manufacturers accountable in the same way.

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I strongly agree with your first paragraph. It’s a great way to articulate the charges VW received significantly supported the environment. It shows various angles of approaching the unethical actions of multi-national corporations that led to amazing initiatives: the zero-emission vehicle program in California, the Beneficiary Mitigation Plan in Colorado, and the new renewable energy models VW is going to be crafting, producing and distributing in the future.

This case does show a lesson in that a main gap in the current international environmental law processes involving a multi-national corporation is imprisoning officers as accountable. Doing so would have supported the aim of investors by potentially increasing the amount the company needed to pay for withholding important information. The way VW got off easy is CEO Martin Winterkorn was not imprisoned for his actions and is still going to have access to $12 million in benefits from position as CEO.

In the EPA article from this week’s Canvas course collection, it spoke about the series of meetings at VW as the International Council on Clean Transportation (ICCT) study was being released. The story depicts so clearly how the data collaborated with pressure from the U.S. government to officially declare VW responsible for their brutal actions. This all occurred due to the fact VW is a non-U.S. company. It’s unclear how other nations would have responded in the case the U.S. was in Germany’s position. Above, Dan and Amber explain cases when it’s happened, and the company consistently gets off easy. Perhaps, this calls for a more effective form of international checks and balances for environmental law. Germany imprisoning Winterkorn would have set the precedent for multi-national corporations and other companies in the car industry that there are criminal penalties for unethical, powerful leaders. Either way, I overall agree with the enforcement actions taken because all of it combined results in a new track of renewable energy for VW and a collection of funding for a multitude of state zero-emission vehicle programs.