Volkswagen Emissions scandal is an example for corporate governance failure. Management of Volkswagen failed to fulfill their legal and ethical responsibilities towards the company and its stakeholders, employees, customers and the wider community.
It was a huge scandal. It all started back in 2014 when scientist is the International Council on clean transportation discoverd that several Volkswagen engines performed differently during emission testing than they did on the road. At the time Volkswagen really pushing and alternative to hybrid vehicles that they clean diesel Technology.
Clean diesel which is kind of and oxymoron sins diesel fuels inherently burn sootier than regular gasoline engines. But diesel emits more nitrous oxide and particular matter both of which are very bad. Volkswagen claimed that they developed a nitrous oxide trap that help engines get good gas mileage. International Council of clean transportation scientists discovered that in Volkswagen diesel vehicles exceeded nitrous oxide level on the road test. It exceeded oxide emission standard level by up to 40 Times. In May 2004 the California Air resources board and the EPA opened an investigation into Volkswagen. the EPA decided several of the company's diesel models would not be certified for American sales in 2016. And that was the straw that finally broke Vin Diesel's gate. Volkswagen admitted to having knowingly installed a quote "sophisticated software algorithm" that could sense test scenarios by monitoring speed, engine operation, air pressure, and the position of the steering wheel. Between 2009 and 2015, the software was installed. in about 11 million vehicles worldwide split between VW and two of its subsidiaries, Audi and Porsche. Now, Volkswagen's stockholders were about to pay the price. Volkswagen CEO, Martin Winterkorn, was quickly forced to resign and eventually charged in the United States with fraud and conspiracy. In April of 2016, the company announced plans. to spend $18 billion dollars on repairing the affected cars. Nine months later, Volkswagen pled guilty to criminal charges brought by US Attorney General Loretta Lynch, and was fined $4.2 billion dollars. To date, Volkswagen has paid around $35 billion dollars total in fines, penalties, financial statements, and buyback costs. And while it's difficult to calculate the total effect on stock prices, the penalties are over, either. In September of last year, German prosecutors announced charges against eight more employees. Winterkorn's trial hasn't even begun yet. And a couple of months ago, Volkswagen lost a ruling in court that clears the way for them to be sued by the State of Ohio. Volkswagen admitted that they had been basically treating EPA regulations as a suggestion to be ignored. in the scandal's first two months, the company lost 46% of its shareholder value for about $42.5 billion dollars. There was also the damage done to dealers. Volkswagen paid its US dealers $1.2 billion to compensate them for losses.But again, the total impact can't really be calculated. And then there's the 30,000 jobs that Volkswagen eliminated in the wake of the scandal.
The Cheating scandal was affected the people's trust towards them and also faced a huge loss.
The company has some social responsibility towards the society. The Volkswagen failed to fulfill the ethical rules and it became a massive issue for them.
August 06, 2023
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Failures
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