Target execs in corporate scandals
Volkswagen’s indefensible meddling with vehicle emissions to circumvent U.S. environmental standards has cost the international car maker billions of dollars in settlements, fines and lost sales. Now the Justice Department has taken a new, welcome step and indicted six high-level VW employees on conspiracy and fraud charges.
Some are accused of overseeing the development of diesel engines equipped with “defeat devices” — software that could tell the car to increase emissions controls when it detected that the car was being tested. Others allegedly covered up the scheme by destroying emails and taking other steps to deter regulators from uncovering the truth.
We hope this isn’t just a oneoff prosecution. For too long the Justice Department has focused on fining corporations caught in illegal acts, often agreeing to settlements in which the corporation admits no guilt. As a result, the consequences for the company are limited to fines ultimately paid by insurers, absorbed by shareholders or passed along to customers.
Sure, executives and lowerlevel employees deemed responsible often lose their jobs, but rarely is an individual held criminally liable for the criminal acts. As critics have rightly noted, that isn’t much of a disincentive for those who would cheat or swindle.
Whether the VW employees are guilty will be for a jury to decide — if they ever get before one. Five of the six are in Germany, which has a history of not extraditing its citizens.
The sixth, Oliver Schmidt, had the misfortune of popping up in the U.S. on travel and was arrested Sunday at the Miami airport. (VW engineer James Robert Liang, a resident of Newbury Park, earlier pleaded guilty to fraud conspiracy and is cooperating with investigators.)
Meanwhile, the Environmental Protection Agency and California’s Air Resources Board — the same regulators that ran down the VW violations — accused Fiat Chrysler on Thursday of installing secret software in more than 100,000 vehicles to mask emissions of nitrous oxide, a greenhouse gas. Fiat Chrysler denied it has done anything wrong.
The EPA said it is looking at other automakers as well. And Takata, whose exploding air bags have been linked to 11 deaths, is expected to plead guilty to criminal wrongdoing as soon as Thursday, and pay fines of about $1 billion.
In all of these cases, the Justice Department must continue to ferret out the individuals responsible and not let corporations essentially buy their way out of justice.
It’s unclear whether the Trump administration will take a similar view, given Presidentelect Donald Trump’s support for regulatory rollbacks. But he won the White House by tapping into public dissatisfaction with business as usual. He should put the interests of the defrauded ahead of those responsible for it.