James Robert Liang’s guilty plea in connection with Volkswagen AG’s diesel deception isn’t the end of the feds’ criminal investigation. It’s the beginning.
It must be, given the massive trove of discovery documents amounting to a reported two terabytes of information, a $14.7 billion settlement between VW and U.S. regulators, and a $1.2 billion settlement with VW’s American dealers.
If the Kings of Wolfsburg weren’t calling the engineering shots, and if the documents don’t say as much, and more, would they agree to pay nearly $16 billion to U.S. regulators and dealers merely to atone for the conniving of a few rogue engineers?
The question answers itself. These are the same people who were keen to safeguard their multibillion-dollar investments in diesel technology, to bolster their “Clean Diesel” scam of American consumers, to cheat in order to inflate (false) claims of technical superiority that routinely infuriated industry competitors and duped customers into thinking they were getting something they weren’t.
VW’s engineering-driven culture is infamous for top executives meddling in the smallest technical details, for former CEO Martin Winterkorn crawling beneath rival cars at auto shows, for the ousted chairman and one of the company’s largest shareholders, Ferdinand Piëch, creating a win-at-all-costs ethos that can easily morph into ethical corner-cutting, or worse.
The VW case is hitting its criminal phase as federal prosecutors focus their corporate white-collar cases more tightly on individual wrongdoing, in part because of resentment that so few actors in the global financial meltdown of eight years ago were forced to account for their actions.
The timing doesn’t help VW. Even as prosecutors flex more criminal muscle, the automaker’s case is unspooling amid populist, mistrustful sentiment animating presidential politics on both sides of the aisle. It holds that, among other things, big corporations don’t make mistakes or deliberately deceive consumers and regulators; the people running them do, and they should be held accountable.
That’s a fair point in the real world, and that’s why the Zeitgeist could scarcely be worse for VW. The German automaker is mired in a huge American legal mess at a time when the country’s political sensibilities are decidedly biased against the needs of, and assurances from, large multinationals that struggle with the truth.
The only thing missing are the pitchforks, the burning torches and, in VW’s case, sympathetic allies in a foreign capital. Washington is not Berlin, and Washington has not exactly proven itself to be a friend of even its own automakers — especially once the auto bailouts of 2009 empowered politicians to extract their policy preferences from desperate auto executives.
Nor has President Obama’s bureaucracy, or his Justice Department, proven to be friendly to the auto industry since the bankruptcies of General Motors Corp. and Chrysler Group LLC. The only thing more aggressive than Team Obama’s fuel economy mandates and fanciful expectations for alternative propulsion vehicles is its muscling of automakers deemed to have deceived the public and regulators.
VW and its boosters should expect no favors from federal prosecutors or plaintiffs attorneys who know a source of scalps and fat dollar signs when they see it. The automaker’s bid to skirt federal emissions rules to jump-start its chronically lagging U.S business with a diesel deception instead is tarnishing a global brand in a critical — and rich — auto market.
A seemingly untouchable cornerstone of Germany’s prideful “Deutschland AG” construct is proving anything but. And before the feds are done, the landmark case is likely to become a transatlantic diplomatic kerfuffle should more charges target senior executives in Germany and American prosecutors seek their extradition.
The plea by Liang, 62, last Friday in U.S. District Court in the Eastern District of Michigan strongly suggests that allegations of a widespread conspiracy within VW is growing legs. It says the scheme is not confined to mid-level engineers, and that prosecutors are using the former VW engineer’s cooperation to target suspects higher in VW’s engineering apparatus.
Adding to the embarrassment: Liang is scheduled to be sentenced in Detroit by U.S. District Judge Sean Cox on Jan. 11 — smack in the middle of press week for the North American International Auto Show. If that doesn’t send a message to the global auto industry, nothing does.
Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.