"I am stunned that misconduct on such a scale was possible": What you need to know about the Volkswagen mega-scandal

The German carmaker's CEO resigned yesterday after a massive emissions coverup was exposed

Published September 24, 2015 9:57AM (EDT)

  (Reuters/Wolfgang Rattay)
(Reuters/Wolfgang Rattay)

In one of the more inevitable developments in modern business history, Martin Winterkorn, the head of Volkswagen, resigned on Wednesday.

"I am shocked by the events of the past few days," he said in a statement. "Above all, I am stunned that misconduct on such a scale was possible in the Volkswagen Group."

Winterkorn was of course referring to the mega-scandal that has engulfed Volkswagen in the past week, ever since the Environmental Protection Agency revealed that the company had committed massive industrial and environmental fraud.

His shock must be taken with a huge grain of salt. Volkswagen had installed software in millions of its diesel cars that ensured that the cars could fool environmental regulatory tests. When the cars were actually driven on the road, the software shut down the pollution controls that had been in place during the tests, and the cars then emitted up to 40 times the amount of pollution allowed in the United States. Air pollution is causing immense harm to our health and that of the earth, but Volkswagen apparently didn't care. If Winterkorn didn't know this was happening, he would have been the most out-of-touch CEO in corporate history.

The scandal has blown a hole in Volkswagen's extensive efforts to sell its diesel cars, which it has said in the past were more environmentally friendly than cars that ran on gasoline. Diesel cars are widely used in Europe, but have only a tiny share of the American market. Volkswagen had tried to have its cake and eat it too, by promoting a green image while secretly sending as much harmful pollution into the air as ever before.

Volkswagen now takes its place in the Hall of Fame of corporate villainy, but this is as much a failure of regulation as it is a case of greedy multinationals. Many people will have been stunned to learn just how these tests are conducted. Regulators don't actually take the cars out on the road. Instead, they test them in highly controlled and predictable environments, making it easy for automakers to cheat the system. It was only when a private group, the International Council for Clean Transportation, decided to test Volkswagen cars by driving them like a real human would that the deceit was first discovered. Regulators around the world have wildly inconsistent powers at their disposal, and they are equally inconsistent in their enforcement of those powers.

(A powerful industry that often manages to get away with murder -- who could have predicted it?)

Clearly, regulators in many different countries have to thoroughly overhaul their tests. It beggars belief that "drive it like someone who bought the car would" isn't a prerequisite here. At minimum, cars should be driven on the road, not in a lab, before they're given any kind of seal of approval.

If there's another lesson to be found in Volkswagen's mess, it's that we have to remain hypervigilant about environmental protections and extremely skeptical about the corporate world's claims to have seen the light when it comes to fighting climate change.

It's a testament to the growing awareness of the dangers of climate change that Volkswagen was duping customers on the basis of how much they could protect the planet, but that didn't stop it from sending that very same planet just a little bit closer to the grave in order to make more money. Volkswagen is not the first company to peddle its green credentials while doing almost nothing to change its ways, and it won't be the last. People who promote market-oriented solutions to the climate crisis have to deal with what the market actually is. We can't let the Volkswagens of the world get away with this stuff anymore, and we can't assume that there's a way around forcing mega-corporations to radically change their ways if we really want to save the planet.

Winterkorn's VW Pension Pot Could Top 28m Euros

By Jack Mirkinson

Jack Mirkinson is a writer living in New York. Follow him on Twitter at @jackmirkinson.

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