FINANCIAL COMPLIANCE PROGRAMS, THE VOLKSWAGEN SCANDAL, ANDTWO FINANCIAL COMPLIANCE SCENARIOS

In this article, a compliance program is defined and its characteristics are explained. The types of compliance programs are highlighted, including a commandand-control program, a rules-based program, a principles-based program, and a culture-based program. The Volkswagen scandal is explained, where a brief history of the scandal, a discussion of Volkswagen’s anti-pollution system and the responsible parties, and finally whether Volkswagen’s existing compliance program was relevant is provided. The paper observed that if the defeat device was promoted as a trade secret, Volkswagen middle management and individual contributors would likely have never revealed its existence, thinking that their silence manifested company loyalty. Suppliers and outside counsel would not have disclosed the secret because of signed non-disclosure agreements and attorney-client privilege, respectively. In essence, the presiding compliance program at Volkswagen may not have been a relevant factor in understanding and appreciating employee and contractor silence. Finally, two compliance scenarios are analyzed, revealing under what circumstances an individual may become a whistleblower.