In the recent Volkswagen emissions scandal 11 million diesel cars were found to produce significantly more pollution under actual road usage than in test conditions due to ‘defeat devices’. Revelations have now emerged of a culture of corporate bullying at the heart of the VW group.

Following the departure of CEO Martin Winterkorn, senior executives past and present spoke of fear and intimidation embedded in VW’s management structure. A member of the group’s supervisory board, Bernd Osterloh, remarked that the world’s largest manufacturer needed “a culture in which it’s possible and permissible to argue with your superior about the best way to go”. This statement implies that, under Winterkorn, no questioning of authority was permitted.

Climate of fear

Former executives interviewed by Reuters spoke of “a climate of fear” and “an authoritarianism that went unchecked”. The result was a constant pressure to meet business targets for production, cost savings and sales. A former sales executive described how those who wilted under this pressure either left of their own accord or were ‘managed’ out of the business.

It is clear that VW CEO Martin Winterkorn personally and actively fostered this culture

It is clear that Winterkorn personally and actively fostered this culture. An unidentified source described a 2013 US factory visit where Winterkorn spotted a Beetle whose paint thickness marginally exceeded specifications. The engineers responsible were harangued about waste. A former executive remarked that, “if he would come and visit or you had to go to him, your pulse would go up”. Even more damningly, Winterkorn can be seen barking at an employee in a video from the Frankfurt motor show.

In this cauldron of bullying and intense emotional pressure it is easy to see how the idea of emission testing ‘defeat devices’ was conceived, developed and implemented. It became apparent to someone, somewhere in VW, that their diesels were not going to meet the emission requirements for the lucrative US market that was key to VW’s global aspirations. There were only two solutions: fix the cars or fix the tests. When solution one was too costly or time-consuming that left only solution two.

Rewarding corruption

Whether Martin Winterkorn personally knew about the defeat devices is ultimately irrelevant. It is more important to recognise that the culture of corporate bullying that VW’s former CEO presided over pressured staff into inventive—and not necessarily legal—problem-solving approaches. It then rewarded them for doing so, if only by sparing them the wrath of their CEO.

HSBC money laundering, horsemeat and other corporate scandals reveal that VW is not alone in seeking to deceive consumers in the name of profit. If there is one thing to be learned from VW’s emissions cheating it is that whenever corporatism and authoritarianism collide, corruption results.

Image by Michael H Hallett.