WOLFSBURG, Germany – Nearly three years after Volkswagen admitted to a vast emissions cheating scheme, the company has only just begun to take steps necessary to prevent future scandals.
That was the main takeaway from a report issued Monday by a U.S. lawyer appointed to monitor the company's behavior. Among other things, Volkswagen still has work to do to create an adequate whistleblower program, the lawyer, Larry Thompson, wrote.
Thompson said the report was not intended as a criticism of the company but rather to offer recommendations for future action. "My mandate is a forward-looking one," he said in Wolfsburg, Volkswagen's base.
Still, the implication was that Volkswagen has made insufficient progress toward repairing the shortcomings in company culture and internal controls that led to one of the biggest corporate scandals ever.
"It is not easy to come from shock to shame to change," said Hiltrud Werner, a member of Volkswagen's board responsible for integrity.
But she said that the company has made more progress than it might appear. "There is a lot that might not have been seen from the outside, but the effort from inside is really tremendous," she said.
Volkswagen has admitted programming millions of diesel cars to deliver acceptable emissions only when engine software detected that they were being tested. At other times they polluted far above legal limits. After Volkswagen pleaded guilty in a U.S. court to charges that included conspiracy to violate the Clean Air Act, a federal judge appointed Thompson — who had been deputy attorney general under President George W. Bush — to monitor whether Volkswagen is keeping promises that it made as part of its plea deal and when it settled civil cases.
Monday's report, which dealt solely with the company's compliance with the civil settlements, also underscored how much Volkswagen continues to struggle with the consequences of the scandal, which came to light in September 2015. In a report in April that dealt with the criminal charges, Thompson faulted the company for failing to hold executives accountable and moving too slowly to remake the corporate culture.
"The wrongful acts and crimes that were committed in the United States were enormous," Thompson said. "The cultural change is going to be enormous and it's going to require lots of work on the part of the company."
Despite promises to become more ethical, top management was until recently dominated by longtime insiders who often seemed to be in denial.
Even after pleading guilty, Volkswagen insisted that the wrongdoing was the work of lower level managers and engineers. That assertion became more difficult to defend in May after federal prosecutors indicted Martin Winterkorn, the former chief executive of Volkswagen, on charges that included conspiracy to defraud the government. Winterkorn has denied the charges.
Then, in June, prosecutors arrested Rupert Stadler, the head of the Audi division and a member of Volkswagen's management board, on suspicion of taking part in the fraud.
Stadler is being held without bail. Nevertheless, Volkswagen has not fired Stadler, and in theory he could get his old job back if he manages to win release.
If at the end of this three-year term Thompson concludes that Volkswagen has not done enough to avert future wrongdoing and create a stronger sense of ethics, the company might land back in U.S. courts.