Since the VW emissions scandal broke in September 2015, observers have been wondering if any of the company’s executives would face jail time for their involvement in the massive fraud.
At the end of last year, Oliver Schmidt was sentenced at a court in Detroit to seven years in jail and a $400,000 fine.
Oliver Schmidt, a German national, played a key role at VW’s engineering office in Michigan. As the head of the environmental compliance team, Schmidt knew that Volkswagen vehicles did not comply to US environmental standards, and that VW was using computer trickery to fool investigators. Schmidt actively misled US investigators and is accused of destroying incriminating documents.
Before receiving his sentence, Schmidt acknowledged his complicity. “I only have myself to blame,” he said, “I made bad decisions and for that I am sorry.”
About the VW scandal
The VW emissions scandal emerged in 2015, when the Environmental Protection Agency (EPA) discovered software in VW cars designed to make the cars seem less polluting. The software detected when the cars were being tested, and then switched the engines into an alternative mode that produced fewer emissions. With this method, VW were able to make investigators believe that diesel VW cars operated within limits set by the Clean Air Act.
This means that VW engines were emitting nitrogen oxide pollutants up to 40 times beyond the quantity allowed by US law.
Learning from VW
Volkswagen’s fraud has cost the company billions, lost them decades of goodwill, demolished trust and lead to resignations, recriminations and now, for Oliver Schmidt, jail time. The total cost of the scandal is difficult to determine because it is so vast, and because some effects will not be fully realised in the short term. Only time will tell how badly this incident affects VW.
What happened at VW is a reminder of how bad decisions at one level can ripple up through an organisation. Even though VW employees are reported to have warned against the fraud before it became company practice, the warnings were not heeded. The executives that gave the green light to the scam were blinded by the bucks; all they could see was the immense earning potential of their supposedly low-emission diesel cars. Profits were prioritised over ethical, environmental and legal concerns.
This highlights a key challenge for all organisations; how do we put compliance and lawfulness above profit? How do we ensure an ethical corporate culture, even when the temptation to cheat is so great?
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