VW Fraud: Manager Was Just Following Orders

A year after the exposure of the massive fraud VW perpetrated on American consumers, knowingly deceiving emission control tests while exceeding emission limits by as much as 40 times, the evidence is at hand of the real culprit in the crime – a culture that rewards “just following orders”.

The highest ranking VW manager in the US, Oliver Schmidt, pleaded guilty and received a seven year prison sentence, while his superiors in Germany are protected by Germany’s reticence to extradite its citizens to stand trial in the US. Schmidt, was general manager for VW’s engineering and environmental office, and thus had full access to knowledge of California regulations, of VW’s responsibility to comply with those environmental regulations, and with the engineering that could evade the emission tests.

In an effort to reduce the sentence imposed on him he wrote to the judge that at the meeting in which concealed the emissions cheating software.

A script, or talking points, I was directed to follow for that meeting was approved by management level supervisors at VW, including a high-ranking in-house lawyer … Regrettably, I agreed to follow it.

The cost to the company of “just following orders” in this case was $20 billion dollars in fines and penalties and a severely damaged brand reputation. The cost to Mr. Schmidt was prison and whatever consequences will follow from that in his life.

This is one more cautionary tale in a long history of the consequences of “just following orders”. Boards and Executives would do well to ask what are we doing to create a culture in which individuals do not blindly follow scripts, orders, pressure or distorting incentive plans? Until they do, individuals would do well to prepare themselves with the tools of Intelligent Disobedience.