Wednesday 26 October 2016

VW scandal shines a light on 'greed creed' of multinationals

Published 24/09/2015 | 02:30

Shares in Volkswagen have dropped for the third consecutive day. (AP)
Shares in Volkswagen have dropped for the third consecutive day. (AP)

Every cloud has a silver lining. It may be just a hint of a silver lining in the case of Volkswagen, but the scandal engulfing the car giant does offer an insight into the greed creed practised by huge multinationals.

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It's instructive to bear this voracious ethos of profitmaking uber alles in mind as we listen to expressions of penitence from one VW top dog after another. They're "endlessly sorry" and have "totally screwed up". But their most sincere regrets are for being caught out.

The corporate mindset is a peculiar construct. It doesn't care about common humanity or community or advancing the sum of knowledge - profit maximisation is its overriding focus.

To lead the field in the corporate rat race, a team of senior executives forms itself into a nest of king rats. Any room for business ethics in that profit-driven bubble? Silly question.

No room at all judging by the manoeuvrings at VW, outed for falsifying US emission tests.

Granted, it's been engaged in an open-and-shut case of illegal activity. There is no evidence this is the norm. But VW's behaviour is part of a pattern whereby the business elite regards itself as beyond the law - other examples include having lawyers and accountants on the payroll specifically to exploit tax loopholes. Lobbyists are also employed to press for regulation to be watered down, even in the face of public health concerns. Tobacco and alcohol industry lobbyists spring to mind here.

So, are we witnessing that rare beast - accountability - from VW at last? On the contrary, what we see here is PR spin aimed at damage limitation. Fundamentally, corporate culture doesn't do responsibility - it slows down the profit drive.

The greed creed is a phenomenon we were exposed to in Ireland during the Tiger years. It has left us scarred.

As for VW, once synonymous with reliability and trustworthiness, it has had its brand trashed by its own senior staff. The trust has been annihilated, its core values undermined. In time, this could be taught in business schools under the 'how to break a brand' heading.

Other brands are also vulnerable, thanks to the evolution of a global elite in which ego and bonus-driven hierarchies operate. Unless they are penalised for wrongdoing, their behaviour will never change. Fines will have no impact because they have money to burn. Criminal prosecutions are what will keep corporate culture in check.

But it needs to be top-tier management having their collars felt. After all, VW engineers didn't install that 'defeat device' to rig fume results on their own initiative - such decisions are taken at the highest link in the food chain.

The device was a cynical move because it allowed the company to lie to customers concerned about emissions damage to the environment. This begs two questions: has the German firm faked other test results? How about other car companies?

Once, VW set standards in car evolution. The company was founded in 1937 by the German government under the control of Adolf Hitler. At a Nazi rally in 1938, the Fuhrer said: "It is for the broad masses that this car has been built. Its purpose is to answer their transportation needs, and it is intended to give them joy."

World War II intervened. But the Allies made the company the focus of their attempts to resuscitate the German car industry, and Hitler's dream 'people's car' surpassed the Ford Model T in popularity.

In recent years, VW has been intent on trying to set other records, concentrating on CO2 emissions and fuel-efficient technologies. But its green credentials are now in tatters. And what we're witnessing is textbook crisis management. Expansive apology. Internal investigation. External review.

Money set aside for fines and legal action. Yet I don't sense a lesson truly learned. Is lip service to corporate ethics being mouthed with those mea culpas?

The struggle to contain the excesses of corporate power would appear to be a one-sided battle, with multinationals winning hands down. Politicians allow their arguments about job creation to trump other concerns.

Big business, of course, doesn't do loyalty to workers. Only to profit margins. What's needed is real regulation and tighter controls, including over byzantine tax structures - which they will resist with every weapon in their arsenals.

It is now some 200 years since the industrial revolution and the hope that the gap between rich and poor would be narrowed seems to be unattainable. Giant corporations rule the roost and sharing is for sissies.

In the US, the average chief executive is now making nearly 300 times what the typical worker takes home in his or her pay packet. Today, 99pc of all new income is going to the top 1pc.

There is nothing wrong with profit. But it ought to be sustainable profit with ethics attached to earning it. Why should we allow conglomerates to frustrate that? A company has a duty to its shareholders; but there is one, too, to other stakeholders including employees, customers and society at large. VW's leaders were blinded by the greed creed, as others have been. Still, it's a funny old world when the notion of an egalitarian 'people's car' becomes a symbol for ravenous corporate culture.

Irish Independent

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