VW: The Challenge of Whistleblowing
Updated: Sep 10, 2020
The following guest post is by Wendy Addison.
A hand shot up from the lecture hall: ‘I don’t understand’, a young economics undergraduate said, looking perplexed, ‘surely a company’s executives would want to know about unethical practices in the organisation?’
I was lecturing on Corporate Governance at Warwick Business School, and had just introduced the topic of Whistleblowing and Speaking Out to the students. Taking my time in responding, and conscious of holding the tension between what is currently the dominating response to whistleblowers, and what it needs to be, I balanced my answer by challenging them with a set of questions.
Utilising the Volkswagen case as an example, we debated and explored why no one had challenged the cheating devices in such a large, multinational corporation. There was no doubt that Volkswagen would have extensive policies and procedures in place for anti-corruption, bribery and whistleblowing. Yet the deception still occurred, only being discovered by accident, when researchers at West Virginia University were testing fuel efficiency under on-the-road driving conditions. It was the researchers who passed on their discovery to the regulators.
I focused upon how employees at Volkswagen might have experienced the context, the culture, and the systems at Volkswagen. Perhaps this would shed some light on why there were no whistle-blowers prior to detection.
Setting the scene, I reminded the students that VW bristled with unbridled confidence in its technological prowess. They were headed up by larger-than-life CEOs, who had been driving the organisation to become the largest company in their marketplaces. With a workforce of 593,000 employees, the company had exhibited the kind of pride that often comes before a fall. A 2014 Television advert reflected this self-conscious righteousness. Hubris had given wings to what can only be described as a regulatory heist.
Here are some of the deep-dives I did with the students:
Scrutinizing Volkswagens’ complicated and questionably governed company gave the students added insights into the conflicts of interest of some board members. There were incestuous relationships with the vast majority of board members being insiders, as having close ties to existing interest groups. I asked the students to imagine themselves as employees of Volkswagen, having knowledge of previous scandals such as their rigging of the test for auto emissions a few years earlier, where the penalty was only a mild slap on the wrist. As a loyal, long term employee, you also knew about Volkswagen installing a ‘defeat device’ back in 1973, incurring a civil penalty of $120 000.00. So, what kind of message do you get with this historic oversight of misconduct and even more so, with those outcomes? I asked the students, if you were thinking of whistleblowing, would you ask yourself if your disclosure would attract stronger penalties?
My next challenge was to get the students to consider whether the attempts of VW executives to throw various senior engineers under the proverbial bus was a new behaviour or something they were practiced and well versed in. Was this action a way to deflect closer scrutiny of its marketing, financial, and sales executives? I challenged them to think, does knowing that blowing the whistle might result in you being thrown under the bus help or hinder your ability to speak out?
I suggested that they think about historic cheating, and how bending the rules had been normalised as business as usual at Volkswagen. In other words, was the labelling of misconduct ambiguous? Did the slippery slope of moral elasticity and ambiguity of wrongdoing result in a corrupt system, enticing and allowing corrupt behaviours?
In closing my lecture, I suggested that the current narrative of ‘if you see something, say something’ is hopeful at best. We all want to believe we will and can speak out when observing misconduct. We want to believe our message will be received and acted upon. We want to believe in a fair and just world. Whilst whistleblowing presents the best and sometimes only solution to many cases of organisational wrongdoing, we need to better understand the conditions that encourage and discourage it in order for it to be a robust avenue to mitigate corruption. It clearly failed at Volkswagen, but what of the lessons learned?
Wendy Addison is the CEO of SpeakOut SpeakUp. Wendy brings a unique perspective, rooted in her own personal experience of having secured justice in an eleven-year battle against corporate corruption in the case known as South Africa’s Enron, the biggest corporate disaster in South Africa’s history. She is now a lecturer at Surrey University and Warwick Business School, is a contributing member of the UNCAC Coalition, the Corruption Research Group of the Surrey University and sits on the advisory board of the Whistleblowing Research Unit which runs the International Whistleblowing Research Network at Middlesex University in the United Kingdom. Wendy can be reached via her website here