Response to VW diesel emissions scandal will define former CEO

Martin Winterkorn undoubtedly worked hard to rise from a research laboratory at Robert Bosch GmbH to lead the Volkswagen Group, the world’s second-largest automaker.

The metallurgist became one of Germany’s top industrialists, but rather than enter a comfortable retirement, at age 70 he faces fraud charges in a U.S. federal court.

A single decision, made in the twilight of his career, will forever define Winterkorn’s legacy, no matter the outcome of this case.


The former chief executive’s fall from power into disrepute should serve as a cautionary tale for us all: One lapse of integrity can cost us everything.

RELATED: What’s the penalty for 11 million counts of fraud?

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Chris Tomlinson

Federal prosecutors allege that when Volkswagen executives briefed Winterkorn on how engineers had rigged diesel vehicles to cheat on emissions tests, he instructed them to let the fraud continue. By doing so, he became personally responsible for violating not only clean air laws in dozens of countries but betraying consumers who thought they’d bought an environmentally sound product.

The fraud began to unravel in early 2014, when a small environmental watchdog group, the International Council on Clean Transportation, released a study reporting that two VW diesel cars emitted up to 35 times more nitrous oxide than was allowed under federal law. Upon learning of the investigation, a VW executive investigated, identified the problem in a memo and requested a meeting with Winterkorn, the indictment says.

“The company knowingly continued to deny the existence of emissions cheating in its vehicles,” according to the U.S. Justice Department. “Instead, VW sought to deceive U.S. regulators about the causes for the significant discrepancies between emissions tests and emissions values measured on the road.”

In the summer of 2015, U.S. regulators threatened to block sales of 2016 models until VW explained why its vehicles violated emissions standards. Winterkorn chaired a meeting on July 27, 2015, where executives laid out the emissions cheating scheme in detail and the legal implications, prosecutors say.

“Upon being presented with those and other facts, Winterkorn did not order his subordinates to disclose the cheating but instead agreed to continue to deceive U.S. authorities,” the indictment alleges. He ordered executives to meet with U.S. regulators, lie about the emissions-cheating software and convince them to allow sales of 2016 models.

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When confronted with a direct question from a U.S. regulator, though, one VW employee broke ranks and told the truth about how engineers had programmed VW diesel vehicles to detect emission tests and temporarily reduce emissions.

Fifteen days later, VW confessed. Two weeks after that, the board of directors fired Winterkorn.

We’re unlikely to ever fully understand Winterkorn’s reasoning. Neither he nor his attorney is commenting. But there are charitable explanations.

CEO’s justify a lot of bad behavior by invoking their obligation to protect shareholder value. When the scope of the fraud was laid out before him, he could quickly surmise the impact on VW’s stock price.

Winterkorn also recognized that some VW executives and engineers had committed serious felonies in multiple countries by selling 11 million of these vehicles from 2007-2015. Why reveal the fraud and open the company up to criminal charges until prosecutors proved they had gathered evidence?

Or maybe it was hubris; a powerful CEO in charge of a global company worth billions of dollars looking down his nose at pesky regulators and expecting a slap on the wrist. After all, isn’t that what happens typically to white collar criminals who run companies big enough to sink a nation’s economy?

None of those calculations stand up to reason. A corporate leader’s duty to shareholders includes identifying and stopping criminal behavior, not perpetuating it. Everyone should know by now that the cover-up is worse than the crime.

VW’s stock did drop on the revelations, and the company has paid more than $20 billion in penalties to U.S. federal, state and local authorities. But the company has bounced back, promising to flood the world with hybrid and electric cars.

RELATED: Admitted-felon Volkswagen still 2nd-largest automaker

The marketing department has even turned the crisis into a publicity shtick. At Houston’s Art Car Parade, a VW Beetle billowing black smoke participated. Marketers handed out pamphlet’s urging people to join Emissions Anonymous, a 12 Step Program for fighting climate change.

“Step 12: List anyone we have harmed and make amends to them, from consumers who believed our lies about ‘clean diesel’ to any person or thing subject to the effects of climate change,” VW promises.

Winterkorn could not imagine leading his company through the scandal and back to profitability. He couldn’t find the moral courage to speak up and do the right thing when confronted with his company’s crimes.

Winterkorn will forever be the guy who failed when it mattered most. Don’t be that guy.

Chris Tomlinson is the Chronicle’s business columnist. chris.tomlinson@chron.com twitter.com/cltomlinson

Nino Plevnik

I am an electric cars lover. I love our planet and want to leave it in good condition to our children. One of the good ways to do this is to reduce harmful emissions into the atmosphere. As a technical person I worked on computers, hardware maintenance and programming. Otherwise I like advanced technologies, music, books, movies, life and nice weather.

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