Question

Since 2009, Volkswagen has allegedly installed elaborate cheating software in 11 million vehicles worldwide including 482.000 diesel vehicles in USA. It was done purposely to defeat the Environmental Protection Agency and Clean Air Act regulations in USA and similar regulations in other parts of the world. While the final resolution of the case is still difficult to predict, the immediate effect was that Volkswagen stock dropped 20% and the CEO resigned. It is estimated that company will face EPA penalties of up to $37,500 for each vehicle not in compliance with regulations in USA alone. The company has immediately put aside $7.3 bn to pay for the fault—which is likely to include a massive recall—but some analysts predict that a final bill would be closer to $18 billion. The “defeat device” software was used to cheat on lab tests on nitrogen oxide (NOx) levels, even though they emitted as much as 40 times the legal limit of NOx on the road where a car would be guided by different software that would increase acceleration, torque, and fuel economy making it more attractive to customers. It is indeed clever engineering but there is no doubt that everyone involved knew it was highly unethical and illegal as well. This raises several other ethical questions:

A) How is it possible that such a scheme lasted for seven years before it was detected? How many people in VW knew that this software was installed in their cars and did nothing about it? For some, this was detected but it was neglected for over a year saying the EPA testers have gotten it wrong.

b) Who should be made accountable except CEO?

Answer 1

A. The existence of the scandal for over 7 years clearly states that not just the CEO but various stakeholders were aware of this cheating and they were trying to fulfill their ulterior motives by hiding about the same. The process holders, audit and inspection teams as well as the quality experts would have had full knowledge about the bluff being conducted by the parent company. However, some could have been silent because of management pressure while others could have been trying to fulfill their personal interests over the same. It is really not believable that only the CEO of the company was involved in it. The police could have investigated the matter comprehensively, so as to identify the primary guilty in this situation.

b) All the process owners, with whose permission, the defeat device passed all quality checks and made way for the final release with the cars, are at fault and must be considered guilty for the same. The quality assurance (QA) team usually checks the effectiveness of each part of the automobile before final assembly. They could be considered as major contributors in this bluff case. Similar is the case with the operations manager, under whom the supply chain of the company works. The investigating team must conduct a thorough research to identify all guilty associates.