A missed opportunity?

Since the previous blog post on the global investigation into Volkswagen, there have been a number of developments, including a change in CEO and a comment from the board that the blame rests on individuals: “the unlawful behaviour of engineers and technicians involved in engine development shocked Volkswagen”.

Investigations by many authorities are underway. Volkswagen have presented a “rogue actions of others” explanation, suggesting that the matter was not known at board level.

Under UK law, a company  can be guilty of a criminal offence if individuals taking or authorising the unlawful actions represent the directing mind and will of a company. Engineers and technicians involved in engine development in a global company would not obviously be deemed the directing mind and will.

A few days after the Volkswagen investigations became public, the proposed law making it a criminal offence to fail to prevent fraud in England and Wales was quietly dropped. This law would have mirrored the offence under section 7 of the Bribery Act 2010, whereby a company can be guilty of an offence if its employees or agents commit bribery and did not have adequate procedures in place to prevent such conduct.

The investigations are in their infancy, and no firm conclusions can be drawn. However, if the comment from Volkswagen is proven to be correct, and the emissions recorders were purely the actions of “employees or agents”, the case would fall into the gap the proposed failure to prevent fraud offence was designed to fill.

Practical Law David Bacon

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