Niall Hearty of Rahman Ravelli summarises the settling of a claim relating to the Dieselgate scandal.
A district court in California has approved a $49 million settlement to resolve a lawsuit brought against a US subsidiary of Volkswagen over the Dieselgate scandal.
The settlement resolves a civil claim that the US Securities and Exchange Commission (SEC) brought against Volkswagen Group, two subsidiaries and ex-CEO Martin Winterkorn in 2019.
The claim was for allegedly failing to disclose the carmaker's use of illegal software in its diesel cars to cheat emissions tests and bypass US environmental regulations. The SEC had alleged that Volkswagen had defrauded US investors in connection with the emissions test cheating.
The California court granted the SEC's request to dismiss related claims against the Volkswagen parent company and Winterkorn.
This latest settlement, which includes no admission of wrongdoing, comes seven years after Volkswagen agreed to pay $4.3 billion and admitted violating the United States' Clean Air Act by using emissions test cheating devices in millions of its vehicles.
Damaging
Emissions test fraud was a relatively new concept when the Dieselgate scandal hit the headlines in 2015. But it has proved as damaging to Volkswagen as any more conventional form of fraud could have been.
The recently-concluded settlement (and the whole scandal) are a harsh reminder of the damage that a company can suffer if it fails to prevent any form of fraud in the workplace. While emissions fraud may not be commonplace, the damage it has done to Volkswagen's finances and reputation show the impact it can have.
Whether it be to prevent emissions fraud or any other kind of fraud, companies have to put in place procedures to identify and tackle the potential for such wrongdoing, in whatever form it may take.
Emissions testing fraud is, arguably, unique due to the number of people it affects. The fraud has been committed against those who test and monitor emissions, the organisations they work for and the consumers who will have been misled by false data.
Practices
The fall-out from this particular scandal has certainly forced Volkswagen to reassess its working practices. Any such reassessment has to involve changes to procedures to remove the potential for fraud. It also requires the development of an anti-fraud culture, where employees are made aware of the need to identify and report possible fraud.
Such compliance measures are essential if a company is to remain within the law. Some companies may believe they do not possess the expertise to devise and introduce such measures. If that is the case, they need to seek assistance from those who can do it for them. If the Volkswagen case proves anything, it is that companies will pay a high price if they fail to prevent fraud.
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