Anton Colella: VW and the mechanics of corporate failure

Anton Colella, ICAS CEO
By Anton Colella, ICAS CEO

16 October 2015

Anton Colella discusses the serious questions at the heart of the Volkswagen emissions scandal.

The Volkswagen scandal has rocked corporate Germany and sent a few tremors through many other boardrooms.

As Warren Buffet put it so starkly: "It takes 20 years to build a reputation and five minutes to ruin it."

In VW's case, 80 years of proud history has gone up in fumes.

When one of VW's marketing teams coined the slogan "Keeping ahead through technology", they can't have meant this.

I believe there are two areas of obvious focus now.

First, how could better corporate governance have prevented this?

Second, what was the role of individual responsibility in the whole affair?  Why did no-one use 'The Power of One'  to challenge and whistleblow on the whole sorry saga before it got to the stage of a corporate scandal which now threatens the future of German's flagship company ?

What was the assurance around the crucial software and the people who were responsible for it?

One analyst has claimed that there was evidence for those who sought to look closely enough that corporate governance at VW had not been good for a while.

When you get a very public battle between a chairman and a chief executive it should sound alarm bells for investors.

Now VW has set aside £4.7bn to pay for it all.  Although, you have to think that sum may be a bit on the light side.

The eleven million cars fitted with the software may all need to be recalled.

With Leonardo di Caprio now working on the movie to go with the disaster, comparisons with the Titanic will be difficult to avoid.

CAs who inhabit the boardrooms of many of the world's large corporations will now be focussing on how similar issues can be prevented from occurring deep down on the shop floors of their businesses.

It is remarkable how so often in a CA's life it all comes back to the famous motto of our Institute "Quare Verum" – seek the truth.

Topics

  • Thought leadership
  • Audit and Assurance
  • Opinion

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