The timing certainly is appropriate.
On the eve of Earth Day, Volkswagen’s operations in both Canada and the United States have reached new settlements and agreed to new penalties in the ongoing “Dieselgate” emissions scandal that has rocked the company’s bottom line. Still, no senior executive has even been charged with a criminal offence in this global cheating scandal.
Courts in Quebec and Ontario have approved a nationwide settlement of consumer claims related to the 2.0-litre diesel emissions cheating scandal. VW Canada will make cash payments to eligible owners and lessees of up to 105,000 Volkswagen and Audi 2.0-litre TDI vehicles.
And there’s more. Eligible owners can also choose to: *
- sell their vehicle to Volkswagen based on Canadian Black Book values;
- terminate their lease without penalty;
- retain their vehicle, under certain circumstances, and have it modified at no charge, with an extended warranty included;
- trade in the sullied VW at market value, applying that amount towards another VW or Audi model, where eligible.
VW Canada has not released the cost of the settlement in Canada. That’s not just a shame, but unconscionable. Justice should not just be done, but seen to be done and we can’t know if justice has been done without knowing the penalty VW Canada must pay for participating in the three-year global diesel scandal.
Here’s what we know: VW has admitted to rigging as many as 11 million diesel cars worldwide to cheat on emissions tests. This will cost VW tens of billions of dollars in penalties, reparations and settlements.
VW’s own financial reporting pegs total costs of penalties and vehicle buybacks and fixes in North America alone at more than $23 billion (US). But more costs are coming. Volkswagen still faces hundreds of investor lawsuits and a criminal probe in Germany. I have seen final cost estimates that exceed $40 billion (US).
In the United States, just as VW Canada was getting approval for its settlement, a judge ordered VW to pay a $2.8 billion (US) criminal penalty for cheating. VW pleaded guilty to conspiracy and obstruction of justice in the “massive fraud” orchestrated by the German automaker.
U.S. District Judge Sean Cox issued a scathing rebuke in approving the deal negotiated with the U.S. Justice Department involving nearly 600,000 diesel cars.
“Who has been hurt by this corporate greed?” said Cox from the bench. “From what I can see, it’s not the managers at VW, the ones who get paid huge salaries and large bonuses. As always, it’s the little guy,” he added, referring to car buyers and rank-and-file VW workers.
Indeed, not a single senior manager or board member at VW has been charged with any wrongdoing. Instead, seven relatively low-level employees face criminal sanctions in the U.S. Five of the seven are in Germany and are unlikely to be extradited.
The truth is, it’s business as usual at VW. At last month’s results press conference in Germany, Chief Financial Officer Frank Witter’s statement noted that, “In spite of the charges and the challenges arising from the diesel crisis, we can be satisfied on the whole with the group’s business development.”
Last year Volkswagen surpassed Toyota Motor Corp. as the world’s best-selling automaker. At the results conference, VW’s senior leadership was remarkably free of any significant expressions of contrition, regret or admission of guilt or even responsibility. Instead, they focused on how VW earned a 6-7 per cent return on sales in 2016. This level of profitability gives “the Volkswagen Group new momentum and optimism as it enters the next phase of its realignment,” trumpeted a press release.
CEO Matthias Müller said 2016 was both challenging and successful, but offered no apologies. Instead, he said 2016 was a year in which VW “set the course for the biggest transformation in the history of the company – while at the same time performing better in our operating business than many thought possible.”
Scandal? What scandal? Wrongdoing? What wrong doing?
The fact of the matter is, without the U.S. court system and the aggressiveness of justice departments on both the state and federal level in the U.S., VW might have walked away largely unscathed from this calculated act of corporate malfeasance.
Even as the settlements and costs have grown, VW overall has remained resolutely shy in its approach to admitting any failures or wrongdoing on the part of senior leadership. VW’s board, controlled by an incestuous lot of family members descended from Ferdinand Piech and workers’ council representatives, has yet to propose any serious change in how VW conducts its business.
Yet former CEO Ferdinand Piech has alleged that board member and major shareholder Wolfgang Porsche knew about the scandal much earlier that he had claimed, as did former CEO Martin Winterkorn.
Winterkorn, CEO from 2006 until the scandal first broke, was known within and outside VW as an obsessive, micro-managing engineer who many of us spotted peering under the hoods of models on display at auto shows around the world. I and others struggle to believe that cheating activities involving 11 million VW vehicles over many years could go unnoticed by Winterkorn and other senior VW managers.
Winterkorn himself used the “I knew nothing” defence when addressing a committee of German lawmakers earlier this year. He said he was stocked to learn of the cheating, that “striving for perfection could end this way.”
This scandal has yet to run its full course; investigations are ongoing in Europe and lawsuits and other criminal charges have yet to play out all over the world. But if no one in real authority at VW suffers criminal sanctions, if the only penalties VW pays are covered by shareholders in the form of fines and other forms of restitution, then the true scandal is a lack of justice having been served and having seen to be served.
Note: The following 2.0L TDI vehicles are included in the approved settlement program in Canada: Jetta 2009-2015, Beetle 2013-2015, VW Jetta Wagon 2009, VW Golf Wagon 2010-2014, VW Golf 2010-2013, 2015 VW Golf Sportwagon 2015, VW Passat 2012-2015 and Audi A3 2010-2013, 2015