The Lessons of the VW Scandal

The internal and external investigations of VW are far from over. Nevertheless, we already know the full story, because we have seen it time and time again in every industry.

There was an autocratic, demanding, greedy, win-at-all-costs leader. There was a compliant, isolated, insular, inbred board of directors. The leader had a burning desire to be the winner in a highly competitive industry so he could claim personal glory. There were unreasonable, unattainable demands placed upon subordinates by the autocratic leader. There was fear of failure. There was the inevitable choice between meeting the leader’s demands at any cost and following the law. The fear of the consequences of failing the boss was greater than the fear of or respect for the law.

 Individuals make corporate decisions. No internal set of controls was sufficient to stop or catch these individuals. Indeed, it may turn out to be the case that VW’s governance structure actually encouraged or facilitated the fraud.

It took regulations and regulators to catch these criminals. The same regulations and regulators who are routinely villified by the corporate world and politicians. Unless and until human nature is changed, the idea of voluntary regulatory compliance and self-policing is nonsense.

We should be applauding the EPA for uncovering this monstrous fraud on the public.