VW must be open to new ideas and bad news, U.S. monitor says

Volkswagen Group must strive for a less authoritarian structure, be more inclined to allow new ideas and accept bad news, says former deputy U.S. attorney general Larry Thompson, the monitor appointed to oversee the automaker’s integrity and compliance as part of its emissions-cheating scandal settlement with the U.S. authorities. Thompson spoke with Henning Krogh, a reporter at Automobilwoche, a sister publication of Automotive News Europe.

When you started working on the diesel crisis, what did you think VW's core problem was?

That is part of a complex of issues that we are facing on the monitor team, and I still have questions on that. The people involved in the matter are very sharp. Why did they do something like that? Why did they expose the company to such risk? They hadn’t defrauded the company. I think their jobs would have been safe if they had just been honest.

The report into the scandal by law firm Jones Day is not available to the public. Is it important to you as monitor?

It is not a report but rather many small reports, a large number of documents. The monitor panel has been made aware of the content. The reports are very detailed, very comprehensive, and the law firm did a very good job in its attempt to understand what happened. I believe that all the members of Volkswagen’s top management are still not familiar with these documents since, under German law, the supervisory board must hold its own investigation to determine whether the management board had exercised its fiduciary responsibility.

What do you think of the arrest of Audi CEO Rupert Stadler?

I am naturally watching this new development very closely.

Why did you decide to set up an office near Audi in Ingolstadt?

We have to be on site with full-time staff. And a large share of the work relates to Audi. There are legal differences between German and American labor law, for example.

One year out of potentially three has passed since you began working on the VW case. Is one-third of the work already done?

The job is overwhelming. VW is a large, complex company. We agreed with senior management to pursue a common goal. We are not adversaries. We are both working to bring about change within the company. We will try to do that. But we won't be able to do the impossible.

Thompson: "What we have to develop at VW is a method that makes it possible to respond appropriately to the next compliance incident."

Where has VW improved its integrity and compliance?

The company has introduced processes, systems, and controls to handle some of the main problems in the diesel scandal. That means certification, test and inspection procedures designed to prevent errors and cheating or the destruction of documents. These new processes and systems were developed by some very talented managers that VW recruited and promoted internally.

Where do you still see the greatest deficits?

I would rather talk about the potential for change. The company culture offers the greatest potential for this. VW must strive for a less authoritarian structure and be more inclined to allow new ideas and accept bad news.

Are there plans to expand your team in the near future – whether at the VW headquarters in Wolfsburg, at Audi or in the U.S.?

I am not planning to significantly enlarge the team. We might add a couple of technical auditors and experts.

VW board member Hiltrud Werner, who is responsible for i ntegrity and legal affairs is your most important VW contact person. How do you two interact?

Regularly, daily, sometimes by the minute. Hiltrud and I circulate with one another quite often. I think we have built up a very good relationship. It would be completely unacceptable if the monitor team were to simply go to VW employees and ask for access to certain documents. The entire process has to be regulated. So we go through the project management office. We’ve asked for more than 100,000 pages of documents. And we've requested discussions with more than 400 Volkswagen employees.

VW Group CEO Herbert Diess says his main goal is to create "a healthy company culture." What are you advising him to do?

He has to make sure that this message reaches every employee, and call upon what I describe as their 'professional courage.'

Are there doors in Wolfsburg or elsewhere at VW that you are not allowed to open or don't wish to open?

I have access to every room

Is the fact that Hans Dieter Poetsch was on the management board as finance chief before he became supervisory board chairman an added encumbrance?

Not for me. I have heard nothing that would have led me to believe that it is a problem. Mr. Poetsch has been very supportive of the monitor process.

Have you spoken with German Chancellor Angela Merkel about your work at Germany's largest private employer and the world's leading automaker?

No, I have not. By the way, I am a big fan of hers and I would absolutely appreciate an opportunity to speak with her.

What new area will be on your VW agenda in the coming year?

We still haven't determined that fully. We will pursue a risk-based approach, dealing with compliance and ethics processes across brands, looking at various regions, and tackling potential areas involved with corruption. For example, by focusing on Mexico or China. We will address various technologies that are very important for VW, such as electrification and autonomous driving. When the three years are up, I don't want to be asked: 'Why did you do that? And why didn't you do this?' I want to turn to a scientifically well-founded process to select the key issues. That’s why we will draw on the services of a third-party.

Are you optimistic that VW will succeed in becoming the company that the public expects?

Studies indicate that about 5 percent of any company's employees behave unethically when they are presented with the opportunity. What we have to develop at VW is a method that makes it possible to respond appropriately to the next compliance incident. Because there will be another incident. I would like your readers to understand that if I grant the certification, it doesn't mean that there won't be another problem. I would like everyone to realize this. But Volkswagen will be in a position to respond more openly, quickly and promptly and substantially reduce its risks with a more robust and effective ethics and compliance program.

You can reach Henning Krogh at hkrogh@craincom.de.