The EPA announced allegations against Volkswagen AG (VW) of using a “defeat device” in 482,000 of its cars since 2008 in order to make the cars test clean during emissions testing.

The EPA alleged that the company used software that activated the full emissions controls only during testing, but that the rest of the time the cars were running without the emissions controls required under the Clean Air Act. The effect of the defeat devices was that the cars emit 40 times the amount of nitrogen oxide permitted under the Clean Air Act.

Several research organizations uncovered the alleged devices in their testing and referred the information to the EPA.

Volkswagen admitted that 11 million cars had software installed that allowed emissions control systems to work only during emissions tests. When the vehicles were being driven on the highways and byways, they were emitting the pollutants of diesel-fueled cars.

Volkswagen's CEO resigned, and there were numerous new appointments and realignment that continued into 2016. The head of Volkswagen North America, only in his position for three weeks, resigned." Initially, Volkswagen attributed the emissions issues to “a couple of software engineers” who have been fired with this description, “[Deception] was not a corporate decision; this was something individuals did.”

However, as more details emerged, the story of the emissions software changed substantially.

Volkswagen’s goal of developing a fuel-efficient diesel engine proved to be elusive.

Following years of research, the engineers concluded in 2008 that the two goals were incompatible and began installing the illegal software.'* In addition, the oft-recited VW goal was to become the #1 car manufacturer in the world by 2018. For example, in 2013, VW’s then-

CEO Martin Winterkorn told a group of journalists listening to the goal of becoming the #1 car company in the world, “VW wont cut back. We will stay in the fast lane.”"” Another VW officer acknowledged in his testimony before Congress that the cheating may have been triggered by “pressure in the system to get resolutions and also in conjunction with cost pressure as well.”'* A former car company engineer observed, “[A] declared market penetration goal several times the current status can cloud judgments.” As a result, the fear of failure found engineers and other employees willing to do things that were dishonest and deceptive in order to meet the goals.”” German prosecutors have named Mr. Winterkorn as a suspect in their fraud investigation and have alleged that the former CEO may have known about the emissions issue earlier than his public statements have disclosed.”

Volkswagen’s internal investigation revealed that it had “yes-men” who lacked the courage to speak up about issues and problems because of the driven culture. Though the deception was wrong, the employees were responding to management demands that left them with the impossible task of meeting emission goals and deadlines with no legal way to do so.” In conducting an internal investigation of how the “defeat devices” came to be installed, Volkswagen offered amnesty to any employees who came forward with information.”?
Employees who came forward were told they have “nothing to fear from the company in the way of repercussions on the job as being fired or held liable for damages.”**
Volkswagen entered a guilty plea to criminal charges on the emissions falsification and agreed to pay a $4.3 billion fine.?> Volkswagen has also agreed to a $28 billion civil settlement for those who purchased the emissions-deceptive cars. The U.S. government has indicted seven Volkswagen executives, several of whom reported directly to Mr. Winterkorn........................

Discussion Questions 1. Explain what leads employees to believe that they 2. What consequences can you foresee from the employees’ actions?

3. What did Volkswagen not make clear about must follow orders for their companies. following orders?