Question 4: The problem of sanctions (a) Jonathan Clough argues that the neo-classical economic model of corporate behaviour, which see[s] the corporation as a rational actor which engages in a cost-benefit analysis is, in practice, unrealistic and does not adequately deter corporate wrongdoing. What theory or theories does Clough suggest should also be considered in determining how to best respond to corporate wrongdoing? [1 mark]

(b) Cloughs discussion of corporate sanctions and their efficacy is developed in relation to corporate manslaughter and workplace safety issues. Do you think any of his arguments could be relevant to a discussion of the Volkswagen diesel scandal that we studied this semester? If not, explain why not. If you do think his arguments could be relevant to the Volkswagen scandal, what do you think he would suggest would be an effective punishment if there was found to be intentional deception? Explain your reasoning, using Cloughs article as evidence for his positions. [5 marks]

(c) Do you think that the various sanctions imposed on Volkswagen in different countries serve as effective specific or general deterrence? Why or why not? If you do not think they are effective, what do you think would be? [4 marks]

Summary of Volkswagen case: Volkswagen, after a marketing campaign designed to convince consumers that their diesel engines were environmentally-friendly and had low emissions, were discovered to have been relying on a defeat device which could determine when the car was being tested. The defeat device then acted to ensure that the emissions during a test would show low emissions, even as the cars actual emissions in normal conditions far exceeded allowed limits on nitrogen oxide, a compound that has significant consequences for human health and the environment more generally. The documentary Dieselgate: The Greatest Auto Scandal Ever traced how the defeat device was discovered, showed some executives responses to journalists inquiries, and detailed some of the consequences faced by Volkswagen and other car manufacturers as a result of the discovery. Civil and criminal investigations and prosecutions resulted in fines, recalls, and warnings in countries around the world, with a total cost of USD$34.69billion in fines and settlements world-wise as of March 2020. See Dieselgate (on Moodle), Volkswagen says diesel scandal has cost it 31.3 billion euros (Reuters Staff) https://www.reuters.com/article/us-volkswagen-results-diesel-idUSKBN2141JB, and Russell Hotten, Volkswagen: The Scandal Explained https://www.bbc.com/news/business-34324772