MORE EVIDENCE OF CORRUPTION AT VW
EUROPEAN UNION INVESTIGATING GERMAN AUTOMAKER COLLUSION
A blockbuster expose in the German newsmagazine Der Spiegel in July 2017 revealed that the Volkswagen and its subsidiaries had engaged in regular, secret meetings with its competitors, Daimler and BMW, and that the topics of these meetings included efforts to fix the prices for emissions technology and to standardize the size of tanks for AdBlue, the liquid used to mitigate Nitrous Oxide emissions. Der Spiegel reported that the European Commission was investigating whether these secret meetings constituted collusion, and at least one of the automakers has been reported to have admitted that the group acted as a cartel.
VOLKSWAGEN IS STILL USING ‘DEFEAT DEVICES’ – AND IS STILL GETTING CAUGHT
Twice in 2017, Volkswagen was forced by regulators to recall cars that continue to employ “defeat devices” intended to cheat on emissions tests. In July, German authorities demanded a recall of 3-liter Porsche Cayenne SUVs, because they were found to contain a “warm up mode” that helped the vehicles comply with emissions testing. In December, Volkswagen was forced to recall the Touareg, which included both a defeat device and an additional device that illegally restricted the use of AdBlue, the chemical additive that helps to reduce Nitrous Oxide emissions.
SKODA’S EGYPTIAN SCANDAL
Skoda is a Czech subsidiary of Volkswagen. For over 20 years, the Artoc Group served as the sole distributor of Skoda’s vehicles in Egypt. After a Skoda manager demanded a kickback from Artoc, Artoc reported the demand for a bribe to Volkswagen. But instead of removing the manager, Volkswagen and Skoda punished the whistleblower by taking away Artoc’s exclusive distribution rights. The German newsmagazine Der Spiegel reported on the scandal in April of last year and asked, “Is this now the next scandal in the long list of embarrassments for Volkswagen?”
THE PERKS AND PROSTITUTION SCANDAL
Around the same time that Volkswagen was approving the plan to create defeat devices to cheat on emissions testing, the company was at the center of a major scandal. In 2005, it was revealed that VW’s personnel head, Peter Hartz had maintained a secret slush fund that lavished junkets, luxury hotel stays, and even prostitutes on VW executives and worker’s council leaders. At one Audi workers council meeting, the entire top floor of a Hanover brothel was rented out for the executives. A single union leader, Klaus Volkert, received more than $3.7 million in illicit perks and payments.
2017 was not a good year for consumer confidence in Volkswagen vehicles in China. Volkswagen was forced to recall 4.86 million Chinese cars that had potentially faulty airbags in September of last year. That very same month, they also were forced to recall 1.8 million vehicles over faulty fuel pumps that occasionally caused the vehicles to stall. Earlier in the year, Audi announced it was recalling approximately 680,000 cars in China over defective coolant pumps.
$2.2 BILLION IN FINES TO VW SUBSIDIARIES FOR COLLUSION
In September of 2017, Scania, Volkswagen’s Swedish subsidiary, was fined over $1 billion by the European Union for participating in an illegal cartel along with five other truck manufacturers. Scania denied the allegations and stated it would appeal the decision, but the other five manufacturers had all already confessed to participating in an illegal price fixing scheme that lasted for more that 14 years. The first firm to confess to participating in the cartel was another VW subsidiary, MAN, which settled with the EU by paying a $1.2 billion fine.