Volkswagen - A case of corporate immorality?

Volkswagen - A case of corporate immorality?

Postby Bill » Mon Sep 28, 2015 8:20 am

You are probably aware of the substance of the case being made against VW. A quick recap: A device in the diesel cars to reduce emissions to a "safe" level only operated when the engine was connected to a test rig. At all other times, the engine polluted the air at levels far above legal limits, so that drivers could get better miles per gallon than could ever be achieved with an engine that conformed to air pollution standards. The software in VW's was also used to improve Audi engine MPG.

Former CEO Herr Winterkorn faces criminal charges for his part in the affair, and the company is being fined approximately $18 billion. And, I suspect, as more detail emerges, lower members in the VW hierarchy may also face prosecution: I cannot think of any alibi that might save the software engineers from being found culpable for writing the code that turned off the emissions controller. Very crafty that they found a way to turn it on during Smog tests, but being very crafty has rarely, if ever, led to an acquittal.

Th conundrum I face is the logic surrounding the imposition of fines on a corporation found to be in breach of regulations within a jurisdiction where it operates.

Who, precisely, is supposed to be punished by such administrative action? Well, in law, a corporation is a legal entity that can enter into contracts that outlive the employment of any one or more of its officers. And if the contract contains penalties for non-compliance of one or more clause, then there is a legal case for saying that corporations are liable for acts that lead to such breaches. So, legally, it is the corporation that gets punished.

However, the requirement to pay large fines tend to to hit two other groups: both of whom have some claim to be innocent bystanders. VW employs 270,000 workers, of whom I would guess 99.99% had no idea that their CEO was out to make money in a manner that some - German prosecutors, for example - would say was illegal. And the shareholders, who will see their interest and dividends slashed to pay the fines can show they had done nothing wrong whatsoever in loaning cash to VW in order for it to fund its operations. Workers not involved in carrying out immoral acts, and pension fund managers really, to me, to be too divorced from corporate acts to make them suffer for it.

In my simplistic view, corporations should not be required to pay penalties for breaches of contract performed by its officers and employees. The fines and penalties should go directly to the responsible individuals, who would be required to pay in full from their private resources. Despite recent Supreme Court rulings in the US, I cannot, at a philosophical or logical level, accept that corporations are the same as individual human beings.

I think corporations should be treated more like we treat the military. If troops carry out criminal acts, the troops themselves get dealt with according military or civil law: most of us would be a bit taken aback if the Pentagon was handed a stiff fine because a soldier used his M-16 to rob a bank.
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Re: Volkswagen - A case of corporate immorality?

Postby gilnv » Tue Sep 29, 2015 6:05 pm

Growing up in Detroit, Mi and its suburbs, I've worked in some auto factory plants and known many long time employees there. Therefore, most of my life I've never considered the employee responsible in a corporation. But over the last twenty five years I've slowly changed my mind, and presently I think its terrible that the decision maker ever gets off free because they can hide behind the legal 'corporation' label.
I'm also amazed that VW with its profits and reputation, has risked their American sales by doing this.
Yep, it bugs me.

P.S. I like the idea of the corporations being treated more like the military, although I think some punishment should still go to the corporation in order to hopefully deter some future violations.
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Re: Volkswagen - A case of corporate immorality?

Postby romansh » Fri Nov 20, 2015 6:59 pm

By punishing the corporation we end up punishing the shareholder.

Those of us (at least most of us) who are lucky enough to have pensions are punished for the misdeeds of the corporations
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