Watchers cringe as Volkswagen splits from new Compliance chief


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A sign of a ‘veneer of Compliance’?

If recent developments are any indication, much-battered Volkswagen is still wrestling with its Compliance culture, and in a public manner.

The company announced this week that its head of compliance—whom the New York Times described as a rare outsider in the insular company—is separating from the company after barely a year. Volkswagen asserts that it’s a move based on a mutual agreement.

The separation leaves industry watchers and Compliance professionals wondering if there is a veneer of Compliance rather than a deep top-down commitment. The Times quoted former Daimler executive Jeff Thinnes, a European expert on Compliance and corporate ethics, on the heavily negative public appearance: “No matter what spin they put on her departure, the optics couldn’t be worse.”

Christine Hohmann-Dennhardt, who was recruited from an executive position at Daimler, joined Volkswagen as part of the auto giant’s effort to recover from its Compliance scandal related to cheating diesel emissions standards.

A New York Times report on Jan. 26 noted that the surprise departure of Hohmann-Dennhardt “raises concerns about the automaker’s willingness to change ingrained practices, a culture that contributed to the decision to install software designed to cheat emissions tests in more than 11 million cars.”

Volkswagen was clearly in dire need of a Compliance overhaul prior to the hiring of Hohmann-Dennhardt. U.S. authorities investigating the emissions-cheating scandal implicated executives, “engine developers, software experts, compliance managers, and others”—a scope far beyond the early claim by the company that this deception was the work of a few engineers. The company has pleaded guilty to U.S. criminal charges, several individuals have been charged, and the company’s various fines and settlements in U.S. court cases are expected to top a whopping $20 billion.

The magnitude of the scandal and its gaping Compliance faults make the separation of the relatively new Compliance chief particularly stunning. Volkswagen’s statement on the matter offered few details on the departure. The company noted that Hohmann-Dennhardt had initiated a program “to foster the culture of integrity” but that “Volkswagen AG and Dr. Hohmann-Dennhardt are parting due to differences in their understanding of responsibilities and future operating structures within the function she leads.”

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