Martin Murphy, Handelsblatt Editor-in-Chief

It sounds like a business crime thriller, but it’s actually a reality. Ever since 2015, the Volkswagen emissions scandal has been making waves internationally. During their research, Handelsblatt editor-in-chief Martin Murphy and his colleagues delved deep into the events surrounding the illegal defeat devices.

They pored over thousands of files and spoke with participants and victims alike. In his lecture, Murphy shed light on the background of an affair that – unlike comparable scandals such as ThyssenKrupp, or the cum-ex deals at Deutsche Bank – is still making headlines years after it broke. “Those were front-page topics that disappeared after a while. But diesel stays.” He said several factors distinguished the VW emissions scandal: the high number of people accused, and the many customers suing the company for damages. As he also pointed out: “The financial damage is more than 25 billion euro, with no end in sight.”

Not that defeat devices were anything new, Murphy noted. Back in 1974, US media were already reporting on exhaust manipulations. At the time, however, public attention soon wandered elsewhere. That wasn’t the case at VW, where media reporting on the emissions scandal was both ongoing and intensive. Murphy said there were various reasons for this. “First, VW is an innovator, a role-model among companies. Nobody expected dirty tricks in the tech department; it was a huge surprise. Second, no-one could believe internal controls could be so weak that something like that could happen.” Murphy said every company had a few employees who tried to take short cuts; this explained bribery scandals or cartels, and the same phenomenon also underpinned the VW affair. But in this case, the control mechanisms had failed. The documents showed many indications of potential manipulation. “And nothing happened. In fact, there is a very strong tendency to cover things up.”

While many companies now cultivated a ‘speak up’ culture enabling employees to report such activities internally, Murphy noted, this clearly did not work at VW. “Despite the compliance rules. They were in place, but they weren’t lived.” Yet to outsiders, a few signs were there. Murphy recalled seeing long-serving VW boss Martin Winterkorn smoke a cigar in a non-smoking zone, saying this reflected a certain attitude of “rules aren’t so important.” That sent a fatal message to employees.

The financial damage was far more severe than the negative headlines, Murphy noted, saying this was money VW now lacked for investments. He compared it with ThyssenKrupp, which also had to fight cartel accusations, contest bribery cases and deal with failed investments. ThyssenKrupp was fined on all three fronts. According to estimates, the company had to cut an additional 6,000 jobs as a result of this financial hit.

Automotive Summit 2018 – Executive Summary

In early December 2018, over 600 automotive experts from all over the world – including manufacturers and suppliers, tech and energy companies, politicians and associations – attended the auto industry summit in Wolfsburg, Germany. From 3 – 5 December, the industry’s big hitters discussed strategies, concepts and technologies for tomorrow’s automobiles and the future course of their industry.

We’ve compiled the highlights from the Handelsblatt Auto Summit 2018 in an interactive follow-up report.