As part of its settlement with U.S. authorities over diesel emissions cheating, Volkswagen Group agreed to allow a monitor to assess and oversee its compliance for at least three years. Last summer, former U.S. Deputy Attorney General Larry Thompson began operating as the independent monitor, working at VW's headquarters in Wolfsburg, Germany.
Thompson's job is to assess whether VW's compliance program is robust enough to detect a criminal conspiracy such as the diesel emissions fraud and prevent it from happening again.
Thompson, 72, was deputy attorney general from 2001 to 2003 and was head of global government affairs and public policy at PepsiCo until retiring in 2014.
He spoke with Henning Krogh of sibling publication Automobilwoche.
Q: How did you react when offered the assignment of monitor?
A:I said yes without hesitation.
Volkswagen! I knew the company was mired in deep scandal. I thought to myself, here is an iconic, very important company.
A great company in terms of the products it makes and its technologies. And I thought that given my career — as a prosecutor, a defense lawyer, a general counsel of a public company — my experience would be perfect for this assignment. ... There are not many times in your career where you have a chance to do something that has a real impact.
Which of the many jobs you've had has been most demanding?
There is no question; it was my role as the deputy attorney general of the United States when the country was attacked on 9/11. Nowhere was there a playbook as to what the Department of Justice should do when 3,000 people are murdered.
When you first looked at the diesel crisis at Volkswagen, what did you think was the core problem?
I still have questions about that. You have, obviously, the people who are involved, very smart people. Why did they do something like this? Why would they put the company in such jeopardy? They weren't doing this to the company for economic gain. Their jobs would have been secure, I think, if they had just been candid.
Who were the first managers from Wolfsburg you met? And what did you discuss?
The first managers I met in the USA were Thomas Meiers [chief coordinator, Volkswagen Group Monitorship] and Hiltrud Werner [head of integrity and legal affairs]. The first evening I was in Wolfsburg, Hiltrud invited several board members of VW. [Then VW brand CEO] Herbert Diess was there. I was sitting next to him. I was in Germany, and I am sitting next to the person I didn't know was going to become the CEO of the company.
What is your assessment of the arrest of Audi chief Rupert Stadler?
Naturally, I am following this new development with keen interest.
The "Jones Day report" on VW is a great myth for us on the outside. Was it, or is it still, of value for your monitorship?
There is no "Jones Day report" but rather many smaller reports, many documents. The monitor team's lead group has had a debriefing on its contents. It is very detailed, very thorough, and the law firm did a very good job in terms of trying to understand what happened. I don't think even all of the members of Volkswagen Group management are aware of these documents, because under German law, the supervisory board must conduct its own investigation to determine whether the board of management exercised its fiduciary responsibilities.
One year of potentially three years of your monitorship has passed. Is a third of the work done?
It is overwhelming. This is a large and complex company. We have agreed with the group board of management that the monitor and the company have a shared goal. We are not adversaries to the company. We are working together to help transform the company. We are going to try, but I am not going to boil the ocean as we go forward.
In what ways has VW significantly improved since mid-2017 in the areas of integrity and compliance?
The company has put in processes, systems and controls especially as they relate to some of the key problems in the diesel scandal: certification, testing, control procedures that are designed to prevent errors and fraud and prevent the destruction of documents. These new processes and systems are being worked out by some very talented business leaders that the company has recruited and promoted from within.
What are the biggest problems still?
I would rather characterize them as opportunities for change. The greatest opportunity for change is the culture of the company. VW must try to realize a less authoritarian structure and become more willing to accept new ideas — and to accept bad news.
How do you interact with Hiltrud Werner?
We interact on a regular basis; I think it is a very good relationship. It would be completely unacceptable for the monitor team to just randomly go to Volkswagen employees and say, "Give me these documents." It has to be done in an orderly fashion. ... We have requested over 100,000 pages of documents. We have also requested talks with more than 400 employees of Volkswagen.
Diess emphasizes that his main goal is to achieve a "healthy company culture." What is your advice?
He has to make certain the message is understood by all the employees. And they must be called upon to have professional courage.
Are there any doors you may not or will not enter at VW?
I have access to every single door.
What area will be new on your VW agenda for the coming year?
That has not been determined yet. We are going to follow a risk-based approach. We will be looking at compliance and ethics processes across brands, at different geographies and at potential areas of corruption. We will focus on Mexico or China, for instance. We will be looking at new technologies that are very important to VW such as electrification or autonomous driving. I don't want to be accused, at the end of three years, with questions like, "Why did you do this?" and "Why didn't you do that?" I want to apply a scientific process in selecting issues. That is why we are employing the services of a third party.
Are you optimistic that following the monitorship, VW will be the company the public expects it to be?
I am optimistic. But the worst thing, my greatest fear, would be that for whatever reason, I do miss something, and I issue the certification, and all of a sudden, a year later, a big problem happens. I would feel personally responsible, and I know the management of the company would feel bad, too.
VW is a big company with a lot of employees. Do you know of any city in the world with 640,000 people without a police force? I have seen studies which state that in any organization, about 5 percent of the people are going to behave unethically when they have an opportunity to do so. What we have to develop at VW is a method that makes it possible to correctly respond to the next compliance problem. Because there will be one.
I want your readers to understand this: When I issue a certification, it does not mean that there will never be another problem at this big company. I just want to make sure everybody understands that. But Volkswagen will be in a position to have a more candid, open and timely response and thereby, through a more robust and effective ethics and compliance program, reduce its risks substantially.