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Audi CEO Stadler Taken Into Custody in Diesel-Cheating Probe (bloomberg.com)
233 points by crunchlibrarian on June 18, 2018 | hide | past | web | favorite | 107 comments

The European auto-manufacterer test cheating is really, really pernicuous. It is mistake to view this as simple test cheating. These tests are a greater part of the "green/carbon reduction" policies that is europe's primary industrial policy of the last decade.

Domestic auto manufacturers have been primary authors of these policies. The bootlegger and baptist dynamic has been very strong here. The "baptist" objective has been carbon/pollution reduction. The "bootleggers" wanted to sell more European cars by (A) giving them an advantage over imports and (B) shortening the lifespan of older cars. They have had an extremely favourable regulatory environment, EU & locally. Pollution-centric tax bands favouring local manufacturers (based on these tests) are just a piece of that. To cheat the tests on top of all this is beyond the pale.

All that said, I think we have no way of holding corporations accountable. Prosecuting individuals is important (and effective), but it also semi-absolves the company. It makes it seem like individual bad actors acted against the law, and against the company. There aren't really ways of holding the company accountable, and limited liability becomes no liability in this sense.

I don't even know what should be done. "Justice" (IMO) would be fairly harsh. Volkswagon Group have annual Revenue & Gross Profit of 230bn & 40bn respectively. Trillions and hundreds of millions over the life of this scam. Some nontrivial portion of these sales were unearned in the sense that they would not have happened without fraud. €1bn-€2bn isn't even meaningful.

I think that shareholders should get a haircut, with a meanigful portion of the company's current value being turned over as a fine. Of course, this would only encourage a restructuring from equity to debt. IDK....

An individual business owner acting under full liability would have (in addition to jail time) almost certainly lost her entire business over something like this. To Volkswagen Group, it's a bump in the road. This is not fair.

> Prosecuting individuals is important (and effective), but it also semi-absolves the company. It makes it seem like individual bad actors acted against the law, and against the company.

I'm struggling to see how prosecutors can win when the public has this attitude. Bring criminal charges against an executive? "You're semi-absolving the company." Bring record fines against the company? "Nobody jails the executives." Do both? People forget whichever happened first and recycle the above.

> I think that shareholders should get a haircut

This is what it means to fine a company. Takata Corporation had to file for bankruptcy as a result of its defective airbag inflators [1]. Shareholders lost and creditors lost (as did employees and those down the supply chain).

[1] https://en.wikipedia.org/wiki/Takata_Corporation

I don't think it's a bad thing. I think it's an important thing, and I think it will be effective for preventing bad behaviour. If it seems otherwise, I'm sorry for being unclear.

But.. I am fuming at what a case like this exposes. We have no real way of holding corporations accountable as corporations. If an individual "sole trader" (or even just a small company) did this, they would almost certainly pay with the loss of their entire business. In this case, shareholders are barely affected. I'm angry (hence the ranting) about this, not at the prosecutor. I'm also don't have a solution.

  In this case, shareholders are barely affected.
Although in principle shareholders are the owners of the company, in practice it's extremely hard for them to exert any control over it.

Their power is spread too thinly for any of them to do much, they have no way of communicating, and the bars for things like minority shareholder lawsuits are almost unreachable.

Not saying shareholders shouldn't take a haircut - by all means let them! - just that you're going to need to punish execs too if you want to deter this type of behaviour.

I agree, and I realize from comments this wasn't clear (hard to be precise in a rant). Whatever the abstract point, criminal liability for executives is effective. It's also (imo) just. This is criminal fraud.

I don't know what shareholder accountability would do. It may just further incentivize liability dodging by altering the dept/equity ratios. It just doesn't seem right to me that shareholders continue enjoying the fruits of this crime, with a fine amounting to no more than a daily fluctuation in shareprice.

This is the point I wanted to be clear on: this is not a minor fraud. Certain engine types have had a massive advantage in European markets. These happened to be engines manufactured and used by VW. These engines and the tax regime around them made certain, very popular models viable. This was all based on fraud.

Adding insult to injury, this happens to be a tax regime the vw both authored and defrauded.

1bn/70bn was the cost to shareholders, relative to market cap. VW Has a high loan to equity ratio, so this understates how insignificant the fine was, relative to the financial proceeds from the crime.

Nationalize the organization. This allows you the flexibility to keep employees employed, fix the culture, extract penalties from the org, clawback comp from responsible individuals and remove them from their positions, and haircut shareholders.

Similar to what the US gov did with GM (streamlined bankruptcy/administration).

This requires political will, of course.

> they would almost certainly pay with the loss of their entire business

As the Takata example shows (and Enron and Arthur Andersen), a big enough fine will wipe out a business.

At the risk of sounding too pedantic: wasn't it the reputational damage that did Enron and Arther Andersen in, eventually?

I'm hairsplitting this because in certain industries, reputational risk is a much stronger deterrent that legal consequences (severe as they may be).

Enron's and Arther Anderson's accounting fraud did them in. Reputation, while certainly diminished, did not play a role in their bankruptcy.

Absolutely worth a watch if you have a chance: https://www.imdb.com/title/tt1016268/

Fraud itself, by definition, is a gain, so that cannot be what did them in.

It's the consequences of getting caught that do you in. The consequences can be fines, the consequences may be legal liabilities, etc. But in some industries, the consequence of losing your reputation effectively means losing your business -- eventually resulting in bankruptcy.

Quoting the Wikipedia page on Arthur Andersen [1]:

> Since the ruling vacated Andersen's felony conviction, it theoretically left Andersen free to resume operations. The damage to the Andersen name was so severe, however, that it has not returned as a viable business even on a limited scale.

Perhaps a better example would be Mossack Fonseca [2], the main firm behind the Panama Papers, who shut themselves down recently because what client wants to be associated with that hot mess?

Your clients running away will kill you a lot faster than any authority (short of industries where an authority can revoke your license to do business, eg: banking).

[1] https://en.wikipedia.org/wiki/Arthur_Andersen#Demise

[2] https://en.wikipedia.org/wiki/Mossack_Fonseca

My understanding is that in Andersen's case, had they been convicted of accounting fraud, they either legally or practically couldn't be auditors for a public company. Since Andersen was really just a bunch of people, it made more sense for those people to move to companies without an accounting fraud conviction, so they could do auditing for public companies.

Take Cambridge Analytica as a more recent example. The company declares bankruptcy after the scandal involving the misuse of Facebook users data but many of the company directors have new jobs at Emerdata, owned by the same parent company.


Well stated. I do not see how prosecuting individuals can be a bad thing. There _must_ be a critical point of individual prosecutions becoming commonplace enough before engineers being forced to play dirty say "Fuck you motherfucker" and report such behaviour to HR or to higher ups etc.

Engineers must have the ability to whistleblow to an independent regulator outside of their organization.

>> to an independent regulator outside of their organization.

Once upon a time that regulator was 'the press'. This is the sort of area where independent media support functional democracies.

The engineer goes to a reporter. The reporter keeps the engineer's identify secret. If and when the police get serious about a prosecution, the engineer can then identify himself to authorities. Should the authorities decide not to investigate after reading the media reports (a very common situation) then the engineer's identity remain a secret held by the reporter.

But this all breaks down these days when authorities simply shout 'fake news' and ignore media reports.

Were the shareholders or the executives responsible? Punish any and all that are guilty.

This really did have pernicious and deep-reaching consequences. For instance, a bunch of UK cities are so badly in breach of their pollution goals that they're being taken to the ECJ over it: https://www.theguardian.com/environment/2018/may/17/uk-taken... Guess where all that pollution's coming from? Diesel vehicles, of course, including the ones which have been cheating on their emissions.

Amusingly, the manufacturers' ability to 'meet' these stringent standards (by cheating) makes the standards seem within reach, and hence causes the standard to get ratcheted up every few years, to a point where you HAVE to cheat to satisfy it. Vicious cycle.

> These tests are a greater part of the "green/carbon reduction" policies that is europe's primary industrial policy of the last decade.

Yes, because greenhouse gases are a bigger threat to people in the long term than NOx. And because everyone agrees on that the actions of the car companies are not so serious.

And because nearly ever manufacturer engaged in such activity you can't then say everyone is going to jail.

> And because nearly ever manufacturer engaged in such activity you can't then say everyone is going to jail.

This is not how the world works, in my experience. See: groups of protestors getting arrested, etc.

From my perspective, in common law, the company (ultimately the stockholders) would have civil liability for the damages it caused. These would be people stuck with a car that is worth less because it's more polluting than it was advertised, people harmed by diesel emissions, and perhaps a bunch to the government for health care costs.

Additionally, this was not just an innocent mistake. If it were merely an error on the company's part, they would still owe damages for the harm they caused. However, this was deliberate. The executives have criminal liability for defrauding the regulatory authorities and their customers. Even if the damage had been negligible, they would still have been guilty of defrauding the regulators. In this case, executives who signed off on false regulatory declarations or asked others to, should go to prison.

Now I know Germany has more of a civil law system, so it might be different, but the common law approach I suggest above seems just to me.

They are paying huge fines, 27 billion set aside, which is providing a large shareholder "haircut."

Punishing those responsible individuals is the only way to change future behavior of individuals that will eventually hold such positions.

Also, you're completely ignoring how many people these corporations employ that had nothing to do with this. What do you propose for those laid off after a "haircut?"

Individual bad actors or a cohort of bad actors often are what make these companies bad in the first place so punishment for them along with financial penalty in the form of fines is pretty close hitting everyone who should get hit as is.

So far, the bill is €1bn.

If the share holders knew about it then yes they should get a hair cut. Since they didn't it makes much more sense to hold the CEO liable. In theory shareholders can replace a CEO but in practice it is just about impossible. The theory where the CEO skips all liability, as is sometime the case in the US, is a recipe for this behavior to continue.

Good. More ceos should be arrested and jailed if companies ignore the law under their watch. Their “rogue engineer” excuse was laughable.

Yet shareholders who pushed executives over the edge with inflated performance expectations get to keep all their gains, if they sold before scandal hit. There are no sanctions in the arsenal of rule of law that could ever touch them.

> There are no sanctions in the arsenal of rule of law that could ever touch them

Prosecutors can and do pierce the corporate veil [1]. Otherwise, losing money on their investment seems like fitting punishment for disinterested shareholders.

[1] https://en.wikipedia.org/wiki/Piercing_the_corporate_veil

I agree. Eventually, the market should figure out that excessive goals lead to bad actors reducing long term value. So losing money on investments is as good of a feedback mechanism as any I can think of.

It's entirely the CEO responsibility to handle the pressure, while taking good business decisions and following the law.

They are paid millions to do this and they are free to leave the company or switch career.

Afaik such pressure doesn't come from shareholders, but from the manager's own desire to get success without taking the negative effects of the risks. Sometimes the shareholders even fight for more healthy practices, also knowing that unrealistic short term expectations might cost them their investment in the long run.

Ya, I'm a VW share holder.. I never asked them to cheat all I'm not sure why I should be punished anymore than the big hit to market cap this has caused them.

Of course they get to keep their gains. Why wouldn't they? None of them broke the law.

So supporting an enterprise that behaved criminally has no economic impacts?

By the same logic, you would also jail the parents, teachers and employers of a murders, because they also "supported" the criminal.

If your 401k invested in VW - which is very likely - are you also supporting its criminal activity?

I'm not talking about jailing but if you economically invest in something that is unethical you should expect to lose money as an outcome (possibly the whole investment).

That is to say, if mutual funds (which your 401k likely comprises) stand to lose significantly to unethical behavior, then they will be a LOT more choosy about who to invest in.

Your argument to the extreme about jailing parents/teachers is missing my discussion point.

But how can shareholders know? Let's say I bought some shares of VW before this scandal. Unless I'm an automotive engineer and have access to test equipment and access to all models of the cars that have the fraudulent software on them, how can I possibly know that something unethical is going on? Even if I did meet all of those requirements, how would I be able to tell whether it was a bug vs. an intentional attempt to defraud the government? What if my government doesn't have those requirements? I don't see how it's even remotely possible for most shareholders to have this information.

The funds will require disclosure and risk-aversion behavior of their portfolio companies and in general not turn a blind eye to the possibility of unethical behavior.

It's not deterministic but it does create a positive feedback loop of ethics compliance.

>>Yet shareholders who pushed executives over the edge with inflated performance expectations get to keep all their gains, if they sold before scandal hit.

No one pushed a super-educated and super rich CEO to do anything. His greed did. Shareholders that sold got lucky, those that didn't are paying the price with tens of billions in penalties.

Jail CEOs and a lot of problems will be solved.

What pisses me off is that this "rogue engineer" excuse must sometimes succeed, otherwise they wouldn't do it. And being an engineer myself I can tell you that few engineers get the idea to do something like that by themselves without at least management approval. More often than not it's done under direct management command.

Even if management isn't directly demanding it, they've promoted an environment that incentivizes this sort of behavior. This could be as blatant and nefarious as setting impossible goals (and looking the other way when they're somehow achieved), or the more subtle and innocent situation where the boss is known as someone who reacts poorly to bad news.

Even if management does not incentivize cheating they are still responsible for it - that comes with the job.

> Until now, backing of the Porsche and Piech families, who control the world’s biggest carmaker, ensured him continuing in the role he’s held since 2007.

It’s healthy to step back and consider how rare, in our world today and across human history, such an expression of the rule of law is. As fashionable as political cynicism may be, patience has a place before one reacts to every scandal with presuming the powerful and guilty will walk free. (It’s an unfortunate way inattentiveness produces a self-fulfilling prophesy.)

>presuming the powerful and guilty will walk free

By and large, they do. The fact that this incident makes to the top of the “news” is testament. If things were different, an exec going to jail would be as commonplace as a convicted felon going to jail, and it would hardly be newsworthy.

> The fact that this incident makes to the top of the “news” is testament

Volkwagen is one of the world's largest companies. That's why it's headline news.

A billionaire drug company's ex-CEO was arrested last year [1]. Nobody outside the Arizona, pharmaceutical or opioid crisis circles noticed. Nobody outside those circles needs to notice.

[1] https://abcnews.go.com/US/drug-companys-billionaire-ceo-arre...

That was in fact a bribery case - they were convicted for bribing docs to prescribe their meds where it wasn’t necessary. But you’re right that phrama company execs are slightly more liable to be actually convicted (Martin Shkrelli is a very good case in point).

While many in pharma still get off scot free thanks to solid lawyers, one can only hope for similar results in other industries.

A sentence of X is a sentence of X regardless of what charge you're convicted on.

Dig up a massive amount of dirt and sift through it until you find something that has the kind of sentence you're looking for and you can easily make a conviction on (regardless of whether or not it has anything to do with the crime at hand) is prosecuting crimes 101.

Martha Stewart, Bill Clinton, Al Capone, etc, etc.

Now, this is a crappy solution because it basically relies on the proliferation of criminal law and catch-all laws (both of which are bad IMO) and the fact that given any random thirteen people you can convince twelve of them that the thirteenth is a criminal if you have enough information about the 13th. Ideally charges would be related to the crime but that's not a practical strategy for prosecuting well connected defendants at present.

True… a scumbag in one area wouldn’t hesitate extending their scumbaggery skills to other areas if they stand to gain something.

How it even theoretically can be as common place as "convicted felon going to jail" ?

If your point of contention is that corporate crime is not as common place as regular felony, you’re right, my statement might have been better phrased.

The point I was trying to make is the percentage of convicted felons getting jail time ought to be close to the percentage of companies (i.e. their executives) guilty of egregious violations and abuses getting jail time.

Q: America has minor drug users incarcerated for life, and the highest per-capita incarceration rate in the world, save Seychelles. How many Wall St. bankers, corrupt DC lobbyists or public officials are in jail for their crimes? A: very few, just to make an ostensible show of a statement now and then to mollify the people during tough times. The bigger the crime, the lesser the time.

Audi/VW/Porsche are not American companies

> It’s healthy to step back and consider how rare, in our world today and across human history, such an expression of the rule of law is

The fact that German industry reputation got a huge blow might be a reason. It's one of those things that hurt more than the little guy.

As I've been watch Spartacus this really hit a cord with me and basically how even what may seem like, to some, limited justice, it is still evidence of progress.

Things take time which is hard to deal with considering other things in our lives move faster than ever. I did ask a friend once that if the FCC getting rid of net neutrality requires Google or SpaceX to launch a better way to connect to the internet does that further justify capitalism? I.E. Do failures of capitalism not exists over a long enough time horizon?

*This was just a thought not something I subscribe to.

This act could itself be politically cynical, depending on your perspective.

> This act could itself be politically cynical, depending on your perspective

There are personalities that see conspiracy in every shadow.

Well, instead of impugning my character and insulting my intelligence, maybe engage me on the point.

I wonder if the fallout of this will be VW/Audi/Porsche investing more seriously into electric cars.

Their major bet on fleetwide emissions reductions has been clean diesel, but clearly that's been all smoke and mirrors. There's been articles suggesting that all the diesel OEMs are 'optimizing' their emissions testing (another poster pointed out this leads to an unrealistic ratcheting effect that furthers unrealistic expectations... regulators think their goal was achieved, so we set even tighter ones).

In the 2000's, BMW bet big on hydrogen fuel cells. That one hasn't panned out either... electric is what's left.

They have announced there will be electric editions of every model in their range, even including Seat/Skoda.

This is what happens when management mandates crazy requirements. Same sort of rubbish happens in tech. Manager comes in and demands "100% code coverage of unit tests" Or every developer to write at least 100 lines of code each day. Push enough and you will get what you ask for, but lift the veil and you will find out that the participants are gaming the system.

Warning: autoplaying audio.

I thought Chrome fixed this? Websites are getting around it somehow?


If you use Firefox, set media.autoplay.enabled = false

Chrome blocks the audio for me, but still allows the video to play. I use uBlock to remove the video player entirely, it is only information pollution and adds nothing of value to the article.

FWIW my chrome only autoplayed with sound muted (v 67.0.3396.87 (Official Build) (64-bit))

Safari successfully blocks it.

If only American CEOs saw justice beyond priced-in “fines.” Good for Germany

What cases are you thinking of, in particular?

Most of what comes to my mind (e.g. Equifax) would be claims falling under civil law, for which we don't arrest people.

I'd put Wells Fargo at the top of that list -- specifically Carrie Tolstedt and John Stumpf.

If their actions weren't worthy of jail, the law should be changed. They created an incentive system which guaranteed that lower-level employees would act badly.

Instead, even after clawbacks, they retired ahead of the game by 8-9 figure sums.

Fraud around MBS and CDOs coupled with institutionalized policies of selling mortgages to unqualified lenders, in the period before the recession

Quantitative hedge funds like Renaissance not paying their fair share of taxes (this effectively means they used unpaid taxes as arbitrage)

Wells Fargo executives institutionalizing fraud regarding fake accounts to pump up numbers, both an SEC violation and considered consumer fraud

And in general we as a country need more punishments when you defraud consumers other than “oops we’ll just pay you back after a class action lawsuit :)”. That’s not at all a reasonable deterrent - and as I alluded if a firm’s perceived chances of getting caught/ what they’ll have to pay are low enough and the rewards are sufficiently high, they may consciously find it more profitable to break the law. The same goes for fines.

> Wells Fargo executives institutionalizing fraud regarding fake accounts to pump up numbers, should be both an SEC violation and considered consumer fraud

It has been [1][2].

If senior management knew about the fake accounts and did nothing or worse, covered it up, they should go to jail. But we have no evidence of that. In fact, senior management had incentives to boost revenue and profit. Fake accounts don't increase revenue. Even before fines, they decrease profits. And we have no evidence of unusual insider sales or exercises while Wall Street was being duped.

Management instituted bad incentives and went up and down with everyone else. Lots of them were fired as the company faced civil consequences. It would be absurd to jail people for something they (a) did not know about and (b) had incentives to know about.

[1] https://www.nytimes.com/2018/05/04/business/wells-fargo-shar...

[2] https://www.nytimes.com/2018/04/19/business/wells-fargo-cfpb...

I am skeptical that Tolstedt especially did not know what was happening. When you incentivize fraud so heavily, you can absolutely predict that employees will act unethically, just as you can predict that starving people will steal. I could imagine Tolstedt underestimating the scale of the fraud her system engendered, but remaining completely ignorant? Nonsense.

Even if we can't find a smoking gun email or audio recording, charges analogous to negligent homicide would be appropriate here.

> Even if we can't find a smoking gun email or audio recording, charges analogous to negligent homicide would be appropriate here

Nobody died for having a fake checking account. (People have died because prosecutors overreached.)

Such stunning lack of empathy for the victims of Wells Fargo makes me want to retch. Is money just numbers to you?

Those extra charges did things like trigger defaults on car loans, cascading to vehicle repossession. For people who don't have large reserves, taking a vehicle away can lead to losing your job and sending you and your family into a downward spiral.

I think there are a few reasons that no one from senior management of a major bank went to jail related to RMBS. One reason is that the Justice department lost its first big case which was brought against two hedge fund managers from Bear Sterns [1]. Typically prosecutors only bring cases they think they can win and this may have shown that prosecuting a lot of these cases was going to be hard.

The second reason is a bit of informed speculation on my part. Our banks have a very symbiotic relationship with Washington, especially when it comes to RMBS. The role of the GSEs is especially important here since they in large part determine lending standards. And once you are there eventually there will be politicians involved. While I would have love to seen Barney Frank being called to testify at a trial it was never going to happen. Trying to cleanly slice off the prosecution of a few bank CEOs was always going to be impossible because of where it would lead.

RenTec is hardly the first people to have a dispute with the IRS. Berkshire Hathaway won a $500M dispute with them last year [2].

In general I agree with your last paragraph, I wish fraud was treated as an actual crime more often and people went to jail. HSBC should not be a going concern in the US after they knowingly laundered money for drug cartels. But alas that is not the world we live in.

[1] https://www.nytimes.com/2009/11/11/business/11bear.html [2] http://fortune.com/2015/01/27/berkshires-netjets-defeats-500...

What specific frauds around MBS and CDOs are you referring to? Certainly some people did indeed see jailtime in the US due to fraudulent use of TARP money for example:


Also several high-profile executives such as Angelo Mozillo settled for high fines and bars from financial services as a result of SEC enforcement. You can find some of the relevant SEC enforcement actions and their outcomes here https://www.sec.gov/spotlight/enf-actions-fc.shtml although that page appears a little out of date.

There were to my knowledge prosecutions also for mortgage fraud etc but just in and of themselves ill-conceived securitizations constitute a fraud.

How have "quantitative hedge funds" not paid their "fair share" of taxes? Are you suggesting that they evade taxes?

I think they're referring to basket options. TL; DR It's a non-story for all but financial engineering geeks.

"Deutsche Bank and Barclays used the options structure to open accounts for their clients in their own names, creating the illusion that they owned the assets. But in fact, the hedge funds exercised complete control over the assets, executed all the trades and raked in all of the trading profits, according to the report.

The hedge funds exercised the options soon after the one-year mark and claimed that the trading profits were eligible for the 20 percent (previously 15 percent) tax rate that applies to long-term capital gains on assets held for at least a year. The report contends that those options were actually short-term trades that should have been taxed at the ordinary income rate of 39 percent, which would otherwise apply to investors in hedge funds engaged in daily trading" [1].

Market makers are taxed differently from other investors. Certain market makers tried to "rent" their low-tax status to hedge funds. All this resulted from a weird 1999 law trying to fix a loophole in some other arcane law [2].

Last I heard, the IRS charged the market makers for the investors' short-term gains [3], and did so retroactively.

[1] https://www.washingtonpost.com/business/economy/senate-repor...

[2] https://www.bloomberg.com/news/articles/2013-07-03/the-irs-c...

[3] https://www.nytimes.com/2015/07/09/business/dealbook/irs-cra...

I had a feeling that was what they were referring to but I don't see why someone operating under current (at the time) tax law should go to jail.


The IRS’s wording suggests that other funds may have also been improperly using basket options. I’m admittedly not even close to being a tax law expert so I can’t really offer much more analysis

I’m pretty sure I was wrong that the taxes were being used as arbitrage, though. The allegedly unpaid taxes seem to be based on payments out of the fund to employees

So they currently have a tax dispute with the IRS over something that was legal at the time and since changed. Why should they be going to jail over that?

Yeah - can we get some evidence or at least a good article about this one?

They may be talking about other corporate scandals, but you could even stay within the realm of diesel emissions cheating by automotive companies with examples like Fiat Chrysler [1], Ford [2], and GM [3]. I think the main thing that got VW execs in trouble was trying to cover it up once they were found out. Who knows though, maybe the only reason the others haven't tried as hard to cover it up is because they saw what happened to VW when they tried. I'm no expert though, and have already forgotten much of what I've read on the subject in the past several years.

[1] https://cleantechnica.com/2018/02/05/fiat-chrysler-facing-re...

[2] https://jalopnik.com/lawsuit-accuses-ford-of-cheating-diesel...

[3] http://money.cnn.com/2017/05/25/news/companies/gm-emissions-...

The banks are constantly caught with defrauding their customers, but all they do is pay whatever they made in a month through that fraud.

> If only American CEOs saw justice beyond priced-in “fines”

We’re one week out from Elizabeth Holmes’ criminal indictment.

Only because she ripped off investors. Ripping off consumers goes unpunished

> Ripping off consumers goes unpunished

The FBI arrested a VW executive in Florida in connection with this same scandal [1]. And last year, Insys’ CEO was arrested [2].

Watch your confirmation bias.

[1] https://mobile.nytimes.com/2017/01/09/business/volkswagen-di...

[2] https://www.google.com/amp/s/abcnews.go.com/amp/US/drug-comp...

Let’s look at some other biases - so one exec from VW (a foreign company) was taken in. How many from GM who are just as guilty? What about the Equifax lot? Wells Fargo? The banks pushing crappy MBSs and ABSs on pensioners?

> How many from GM who are just as guilty? What about the Equifax lot?

Broadly speaking, you get fined for fucking up. You get jailed for covering it up.

American commercial law largely protects company Boards and executives from their own stupidity. This is necessary, since the difference between madness and genius can only be ascertained ex post facto.

Ripping off the government gets you a governorship. See Florida governor, Rick Scott.

> Good for Germany

Sadly, in the "Nash game" of international commerce a country wants to keep other countries' companies on check, while leaving its own free to pollute (elsewhere) and bend regulations.

That's the reason for having international regulations.

How do we prevent people from seeing laws as obstacles, and routing around them? Routing around obstacles - legal or otherwise - seems to be a core pillar of the startup mindset.

In a recent thread about the Daimler diesel recall, a poster claims the issue is more systemic than just cheating at individual companies.

> The actual programmer & designer of the software is the supplier of the engine control units (ECUs), in most cases Bosch. The software that they supply actually already contains these cheating routines. These routines are delivered as a part of the software packages, and can be turned on/off with some flags.

It is up to the auto company how to set these flags. [0]

Is it legal for Bosch to sell ECUs that can cheat? Should it remain legal?

[0] https://news.ycombinator.com/item?id=17286697

A lot of the early video game cheat codes were really just testing interfaces -- turn on god mode so you could quickly get to that part of the map that was tweaked in the latest build, etc.

There was clearly nothing honest in this scandal, but I'm sure a Bosch engineer can make an honest case that many of these flags are testing and debugging modes that need to be present to fully integrate the product into the engineering and QA pipeline. I've certainly shipped product that has some hidden modes and features used just for my testing and healthcheck infrastructure.

Cheating and adjustable for compliance in a particular locale are the same thing. Being able to fine tune how the engine runs to comply with the law and to "cheat" the law requires the same functionality. Any keyboard that you use to quote Shakespeare can be employed just as effectively to type dirty words.

A routine to detect the exact circumstances of the government emissions test, including the amount of times the steering wheel was moved was needed to fine tune the engine?

Its just not credible.

Isn’t what happens after that condition is detected the critical point? That’s the part that I’d imagine needs to be modified/tweaked as emission standards change.

What legal basis is there for a car to behave differently during an emissions test?

Its not like it has to machine learn which jurisdiction its in to tune its emissions, they know which region its going to be sold in and can make the appropriate settings. Even if some sort of detection were needed the emissions test isn't your key as not every car undergoes it, only a sample.

If corporations are considered people in the USA, will this corporation be punished for spewing thousands or more of tons of pollution onto our streets and lying about it? Oh no, corporations can't be tried like people, they just get to use their money ("free speech") to be people, but when it comes to accountability, only one man is responsible?

If the culture in the automotive industry is to change, then many more executives will have to face the consequences of supporting current common practice.

To generalize this, 'If the culture in the <insert> industry is to change, then many more executives will have to face the consequences of supporting current common practice.'

it's funny looking at cars from 2013 extolling the virtues and greatness of diesel engines vs gasoline ones

He has not been charged so far, no criminal charges. This is just to keep him from interfering with witnesses.

He has been charged with fraud (Betrug) and causing false entries to be made in public records (mittelbare Falschbeurkundung) [1].

This is not surprising, because a hard requirement for pretrial detention [1] is that it is highly likely that the suspect committed a criminal offense [2]. The risk of either flight or obstruction of justice is an additional requirement on top of him being a suspect.

[1] http://www.spiegel.de/wirtschaft/unternehmen/audi-chef-ruper... (in German)

[2] https://www.gesetze-im-internet.de/englisch_stpo/englisch_st...

Is this usual in Germany? To me it seems to be a fairly extraordinary step, almost theatrical.

I would say it's at least not uncommon. Danger of collusion / "Verdunkelungsgefahr" ist an often cited reason for that.



people have died and will continue to die because of excessive emissions and this program of evasion conducted by audi and volvo was willful and malicious.

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