It’s been four months since Volkswagen was caught skirting emissions tests by the United States Environmental Protection Agency. Since then we’ve learned the gritty details – the German carmaker had intentionally programmed turbocharged direct injection (TDI) diesel engines to activate certain emissions controls only during testing. We’ve also learned that between 2009 and 2015, the VW Group sold 11 million Volkswagens, Audis and Porches – specifically the Audi A3, VW Jetta, Beetle, Golf and Passat models – with this cheating software equipped in them, including some 100,000 that made it onto the Canadian market.
But the whole thing, so far, seems to have been met with a collective shrug. At least in Canada.
Sure, there was Volkswagen Canada’s stop sale order for vehicles affected by the software within three days of the news breaking. And there was the duck-taped together compensation package – $500 for use at Volkswagen dealerships, a further $500 credit gift card for use wherever and no-charge 24-hour roadside assistance for three years with unlimited mileage.
But the reaction on the part of Canadian authorities, at the surface, seem to be subdued, especially when contrasted with the uproar elsewhere.
In the United States, the Justice Department sued Volkswagen for allegedly violating U.S. environmental laws, a suit that could carry up to $48 billion in fines. And then there are whispers of a criminal investigation.
South Korea kept it simple, fining the carmaker $12.3 million and ordering recalls of 125,522 diesel vehicles in November.
Germany went on the offensive, raiding the offices and private homes as part of its probe into the emissions scandal and is considering a tax evasion case. And adding to the insult, 66 institutional investors are planning on suing the company in its home market.
It’s a mess. But not in Canada.
In Canada, sales have gone up. The company posted a record-breaking December, selling 4,508 new cars and light trucks, a three per cent increase from last December. Overall sales were up in 2015, reaching 70,344 versus last years 65,677.
So what gives?
Barbara Harvey, spokesperson for Environment and Climate Change Canada – the organization overseeing the federal investigation – insists Canada is in fact investigating the claims.
“Canada’s investigation involves gathering evidence and information relevant to a suspected violation of regulations,” she says, adding that it’s still ongoing so she couldn’t share too much. “If our enforcement officers find sufficient evidence of violations enforcement action will be taken in accordance with the Compliance and Enforcement Policy for the Canadian Environmental Protection Act”
Of course, to do so, regulators are going to ride shotgun with the U.S. EPA in the driver seat.
“Our contribution to these joint efforts with the U.S. EPA is allowing the early identification of potential defeat devices,” says Harvey. “For example, vehicle testing conducted in the fall 2015 at Environment and Climate Change Canada’s laboratory in Ottawa contributed to the U.S. EPA’s issuance of a second notice of violation on November 2, 2015.”
Dr. Allan Bonner, a Toronto-based crisis management expert says the culture of consumerism in Canada also helps to explain the lack of uproar surrounding the scandal.
“We don’t have the history of litigiousness and consumerism in Canada that they have in the United States,” says Bonner. “We haven’t had a Ralph Nader or class action suits as vigorously or as long as they’ve had them in America.”
The scandal, of course, has dragged a few class action lawsuits out of the woodwork.
But the complexities of assigning blame, deciding who to point all that frustration at, is also a murky issue. CEO Martin Winterkorn resigned within five days. Nine managers were suspended and one of those managers, Ulrich Hackenberg, a member of the Audi management board responsible for technical development and one of the key architects behind developing technology for Volkswagens, resigned.
Sara Seck, an associate professor at faculty of law at Western University and a Senior Fellow for the International Law Research Program at The Centre for International Governance Innovation (CIGI), says she suspects Canadian authorities are in the midst of looking for individuals to prosecute in addition to building a case against the company.
“This is not an easy thing to investigate because if the evidence for what happened and who did what is all in Germany then you have to have some kind of judicial cooperation for an investigation that actually crosses borders, to be effective,” explains Seck, who’s an expert in how territorial borders create challenges for corporate social responsibility and climate change laws. “Environmental issues cross borders but the reality is that while multinationals do cross borders easily, you have many entities and forms of that enterprise that are understood as legally distinct.”
Unfortunately, the German automaker is citing privacy laws and refusing to provide emails and communications between executives to U.S. authorities.
“I find it frustrating that, despite public statements professing cooperation and an expressed desire to resolve the various investigations that it faces following its calculated deception, Volkswagen is, in fact, resisting cooperation by citing German law,” Connecticut’s attorney general, George Jepsen, told the New York Times in January. “We will seek to use any means available to us to conduct a thorough investigation.”
It’s a cocktail of confusion, a mess of different country managers and distinct jurisdictions, something Seck says she thinks will take awhile to sort out and could have a larger impact that initially suspected.
“If Volkswagen, which is generally seen as one of the good guys, intentionally does something like this, I think it has a significant implications in terms of undermining people’s ability to trust technical fixes for serious global environment issues as well as with their local health implications,” says Seck. “That is why it’s particularly disturbing – you don’t see Volkswagen really getting that connection, it’s not just about your car being safe, it’s about what impact your car is having on other people’s health and safety.”
But she says she’s hopeful.
“If South Korea has managed to get onto this, if other jurisdictions are able to beyond the U.S., then you would think that something should be happening here at some point soon,” she adds.