Global Glance: July 25, 2016
A quick look at intriguing international stories
By John Bostwick, Managing Editor, Radius
Welcome back to Global Glance. This week we look at:
- New allegations that VW employees “at the highest levels” were involved in deception
- What you should know about the unrest in Kashmir
Suits Allege VW Employees “at the Highest Levels” Were Involved in Deception
During a December 2015 news conference, Volkswagen chairman Hans Dieter Potsch conceded that his company was at fault for deceiving emissions regulators around the globe with clandestine defeat-device software. But, according to NPR, the company continued “to maintain that only a small group of people were actively involved in designing and installing software that allowed diesel vehicles to cheat on emissions tests.”
The claim that only a handful of VW employees were aware of the illegal scheme, and that leadership in particular was ignorant, was undermined last Tuesday by a joint announcement of civil lawsuits by the attorneys general of New York, Massachusetts and Maryland. Much of the information in the announcement has been covered before, including the fact that “the defeat devices [used by VW and its affiliates Audi and Porsche] took the form of computer software designed to ensure that a vehicle's emissions system performed properly only during emissions testing.”
But the new suits, unlike previous allegations, emphasize the culpability of senior corporate leadership. Here’s a particularly damning passage: “The lawsuits allege this cover-up was orchestrated and approved at the highest levels of the company, up to and including the former CEO, Martin Winterkorn. … Throughout this entire course of alleged illegal conduct, in which dozens of employees, officers and senior executives were involved, the investigation found no evidence that a single Volkswagen, Audi or Porsche employee came forward to blow the whistle.”
As evidence that this pervasive corporate culture of deceit persists even in the face of global scandal, the announcement adds that late last year the company’s employees allegedly destroyed incriminating evidence after a tip from “a senior in-house lawyer,” and that last month VW’s board “recommended a package of bonuses for the Management Board that presided over the cover-up totaling over $70 million, including generous severance pay to Mr. Winterkorn himself.”
The announcement was front page news last Wednesday in The New York Times and The Financial Times. The New York Times piece clarifies that the new lawsuits allege that the fraud, despite VW’s previous claims, “involved dozens of engineers and managers and reached deep into the boardroom” and that “for the first time, the suits connected Volkswagen’s chief executive, Matthias Müller, to the scandal, saying he was aware of a 2006 decision to not outfit Audi vehicles with equipment needed to meet American clean-air standards.” The article quotes New York attorney general Eric Schneiderman: ““The idea that this level of fraud could take place and involve so many people at such high levels of a major international corporation is appalling.”
A VW spokesperson is quoted in the article as saying, “There is no credible evidence to support the allegation regarding Matthias Muller.” Muller and other top executives had better hope this statement is supportable, as the article notes that the US Justice Department is continuing its criminal investigation into the matter.
There is more coverage on the announcement, including this article from The Wall Street Journal. Virtually all of it emphasizes that the new allegations assert that more people within the company knew about the deception, and were from higher levels within the corporate structure, than was originally reported.
And now we enter the realm of opinion (mine, not Radius’). This recent revelation seems to me to have been inevitable. Large, established bureaucracies are known for many things, including their propensity to promote the idea that protecting an organization’s reputation is more important than telling the truth. Consider as evidence of this the remarkable claim in last week’s announcement that in the many years the defeat device was in operation not “a single Volkswagen, Audi or Porsche employee came forward to blow the whistle.”
That said, bureaucracies are also known for promoting the principle that there is a “chain of command” that must be rigidly honored. And while communication between varying departments or “turfs” may be poor (even willfully obscure), generally speaking important strategic decisions in large and established organizations are ultimately made by leadership, not by a handful of rogue low- or mid-level employees. As I said in a January post on the subject: “In coming months, it will be fascinating to read about the VW decision-makers involved in the deception, and what exactly they were thinking at the time.”
We’re beginning to discover, perhaps, more about the decision-makers involved, though we still have to wait — maybe for many years — to find out what some of them were thinking when they perpetrated the fraud. As the announcement says, “They knew what they were going to do was illegal, and if caught they would face government enforcement and sanctions. They went ahead and did it anyway.” With so much on the line — including the epic financial and reputational risks, and the potential for criminal prosecution — the question remains: Why did they do it?
What You Should Know About the Unrest in Kasmir
Earlier this month, a young, charismatic Kashmiri militant named Burhan Muzaffar Wani was killed by Indian security forces. His funeral the next day drew thousands of Kashmiris and was marked by further violence between Indian forces and protesters that has not yet abated. The New York Times quoted a former chief minister on the subject of Wani, who had gained a significant social media following. The former minister’s comment speaks to how the longstanding problems in the region aren’t likely to end soon: “Mark my words — Burhan’s ability to recruit in to militancy from the grave will far outstrip anything he could have done on social media.”
While protests are nothing new in the Muslim-majority Kashmir, the Times remarks that the recent unrest is notable for the large number of protesters that quickly became involved. A CBSnews.com article puts the situation into a broader context: “Kashmir remains the primary focus of animosity between majority-Hindu India and its neighbor, the Islamic Republic of Pakistan. There has been an armed insurgency along the disputed border for most of the past three decades, with rebels in India-administered Kashmir demanding either independence or a merger with Pakistan.”
That article contains shocking photographs of a protester who has been shot in the face by India forces using pellet guns, a highly controversial method of quelling the unrest. According to the CBS piece, which was published last Thursday, 600 people had to that point been shot in the face with the pellet guns, including children as young as five years old. CBS reports that “doctors at the main hospital in Srinagar, the capital of Indian-controlled Kashmir, have performed 135 eye surgeries in a week. Many of those patients, doctors say, will lose their sight.”
A Reuters article published last Tuesday explains that India’s “ruling Bharatiya Janata Party, which has advocated a tough stand on Kashmir, shares power with a regional party in Kashmir and has been criticized for failing to address grievances.” Reuters reports that India forces have in recent days been assaulted with rocks by the protesters, and that authorities have imposed a curfew on the region. The article quotes a police spokesperson as saying, “Some miscreants … tried to snatch weapons from the army and tried to set vehicles on fire.” Reuters adds that the recent violence is the worst in six years, and that the US intelligence group SITE said on Monday that “militants claiming to be ‘brothers close’ to Al Qaeda in the Indian Subcontinent had called on social media for people in Kashmir to attack Indian forces.”
For a comprehensive look at the current situation in Kashmir, watch Al Jazeera’s 25-minute program, “Inside Story — Kashmir Conflict: Security or Political Problem?,” posted on YouTube. Al Jazeera also published an opinion piece on its website last week by Tom Hussain, called “Two Centuries of Oppression in Kashmir.” As the title suggests, the article covers a lot of historical ground, remarking that “the situation in Kashmir is a mess created by departing Western colonialists” and that it’s similar in some ways to the Israeli-Palestinian conflict. The author believes the complex situation is in fact “eminently resolvable,” as evidenced by a promising but ultimately ill-fated initiative known as the Composite Dialogue Process, developed between 2004 and 2007 and involving India, Pakistan and Kashmiri separatists. Hussain observes that the process foundered for (surprise surprise) political reasons and that “its remnants were buried under the carnage perpetrated upon Mumbai in November 2008 by militants of the Lashkar-i-Taiba, a Pakistan-based terrorist group that misrepresents itself as an army of popular resistance to the Indian occupation of Kashmir.”