Volkswagen Executives Facing Prison Terms for Dieselgate Scandal
Guilt in the Dieselgate emission fraud case: If the engineers are to be indicted, so too should the managers be held accountable. - Arrests in Diesel Scandal: Consistent Punishment Suggests Managerial Arrests Also Warranted
by Lutz Meier
In a landmark ruling, two former high-ranking engineers from Volkswagen Corporation have been sentenced to significant prison terms for their roles in Germany's largest corporate fraud scandal, commonly known as Dieselgate. The Braunschweig Regional Court identified the illegal activities as "criminal gang activity and fraud," signaling a turning point in the six-year investigation.
Penalties in the rule of law are designed to prevent repeat offenses, and this decision aims to assure that not only Volkswagen but also the automotive industry, economy, and any other sector steer clear of such actions. The imprisonment of those responsible will help underscore the gravity of responsibility and demonstrate the consequences for violating essential safety regulations for humans and the environment.
Jens Hadler, the former head of diesel engine development, and Hanno Jelden, powertrain department leader, received prison sentences of four and a half years and two years and seven months, respectively. Their sentences send a clear message that fraudulent activities will not be tolerated, and this is not just a minor "issue" but a significant economic crime.
A Watershed Moment for Corporate Accountability
As the legal process progresses, it seems that the message "fraud does not pay" has already begun to resonate within German corporate leadership and development circles, even though some continue to view environmental regulations with disdain. Regrettably, the verdict also leaves a bitter taste, as only the engineers have been imprisoned, while corporate managers, including the former CEO Martin Winterkorn, have received suspended sentences or are still awaiting their trial verdicts.
The lack of harsh penalties for corporate managers raises concerns about corporate accountability and sends mixed signals about the consequences of their actions. Ex-VW brand board member Heinz-Jakob Neußer and a department head were given relatively mild suspended sentences. Although the court's reasoning for its sentencing decisions has not been disclosed, it seems that harsher penalties for managers would contribute more effectively to the deterrent effect of the justice system.
The Role of Winterkorn: Engineer's Testimony Suggests Knowledge of Fraudulent Practices
The Dieselgate scandal saw the resignation of former Volkswagen Group CEO Martin Winterkorn in 2015, and Jens Hadler's testimony may provide insight into his suspected involvement. According to Hadler's account, he and Winterkorn disagreed in 2007 over the use of restricted software that controlled exhaust gas treatment during the vehicle's approval test but functioned inappropriately during regular operation. Hadler asserted that Winterkorn insisted on using the software despite his awareness of the violation of rules. Hadler claims to have warned against it but ultimately helped implement Winterkorn's instructions.
Winterkorn's trial has been delayed due to health reasons, and it remains uncertain when (or if) it will continue. The verdicts against Winterkorn and other top managers, such as Rupert Stadler, former Audi CEO and Winterkorn's confidant, will play a crucial role in determining the extent of corporate accountability and the effectiveness of the legal processing of the billion-dollar fraud. It is essential that management's role in the illegal activities is more clearly addressed and that the command center is held accountable for their actions.
Capital, a partner brand of stern, offers further coverage on the Dieselgate scandal, Volkswagen, Martin Winterkorn, Porsche, and Audi.
The Commission has also been asked to submit a proposal for a directive on the protection of the environment, as this ruling serves as a watershed moment for corporate accountability, demonstrating that violations of essential safety regulations for humans and the environment have significant consequences. Moreover, theConnector reports suggest that finance, business, general-news, and crime-and-justice sectors should maintain a close watch on corporate managers' actions, ensuring they adhere to environmental regulations and understand the gravity of their responsibilities.
