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1938 ad for the “KDF-Wagen,” the Beetle’s first incar­na­tion

[7]COMMENT: In the 1990’s, Volk­swa­gen craft­ed an Amer­i­can adver­tis­ing cam­paign that fea­tured the Ger­man word “Fahrvergnu­gen” [8] to entice peo­ple to buy its cars.

Now, VW has found a potent legal strat­egy for shield­ing its exec­u­tives from poten­tial lia­bil­ity in the diesel emis­sions scan­dal: just cite Germany’s pri­vacy laws to avoid pro­vid­ing emails or any oth­er com­mu­ni­ca­tions to US inves­ti­ga­tors [9].

We also note that VW exec­u­tives have long con­duct­ed [10] their busi­ness affairs in such a way as to avoid mobile phones being used for sur­veil­lance. When the issue of mass data col­lec­tion by NSA and GCHQ became at the end of the 1990’s [11], indus­tri­al espi­onage was the focal point of inves­ti­ga­tion and Ger­many’s appar­ent pique. 

Volk­swa­gen’s behav­ior sug­gests that the com­pa­ny was aware of the NSA’s activ­i­ties long before Eddie the Friend­ly Spook (Snow­den) embarked on his “op.”


Mar­tin Bor­mann (right) with Himm­ler

We note that Fer­di­nand Piech, the chair­man of the board of VW, resigned in April of last year [13], per­haps know­ing of the emis­sions scan­dal that was about to emerge.

Volk­swa­gen evolved from the first “bee­tle” car, termed the KDF-Wagen [14]–“strength through joy” car. Designed by Fer­di­nand Porsche, whose grand­son-in-law head­ed the firm until recent­ly, the bee­tle was a major pro­pa­gan­da tool for the Reich.

As is the case with the oth­er Ger­man “core cor­po­ra­tions,” Volk­swa­gen is con­trolled by the Bor­mann cap­i­tal net­work. [15] Rep­re­sen­ta­tives of the firm were present at the August, 1944 meet­ing in Stras­bourg (France), where plans for the Bor­mann direct­ed flight-cap­i­tal pro­gram and sub­se­quent post­war “Ger­man eco­nom­ic mir­a­cle.”

“VW Refus­es to Give Amer­i­can States Doc­u­ments in Emis­sions Inquiries”  [9]by Dan­ny Hakim and Jack Ewing; The New York Times; 1/9/2016. [9]

Cit­ing Ger­man pri­vacy laws, Volk­swa­gen has refused to pro­vide emails or oth­er com­mu­ni­ca­tions among its exec­u­tives to attor­neys gen­eral in the Unit­ed States, imped­ing Amer­i­can inves­ti­ga­tions into the company’s emis­sions-cheat­ing scan­dal, accord­ing to offi­cials in sev­eral states.

The rev­e­la­tion sig­nals a turn­ing point in the now open­ly frac­tious rela­tions between Volk­swa­gen and Amer­i­can inves­ti­ga­tors, after claims by the Jus­tice Depart­ment, in its own inquiry this week, [16] that the com­pany had recent­ly “imped­ed and obstruct­ed” reg­u­la­tors and pro­vided “mis­lead­ing infor­ma­tion.”

Sig­nif­i­cantly, inves­ti­ga­tors say, Volkswagen’s actions lim­it their abil­ity to iden­tify which employ­ees knew about or sanc­tioned the decep­tions. Find­ing the peo­ple respon­si­ble for the cheat­ing is impor­tant to the law­suits: Penal­ties would be greater if the states and oth­ers pur­su­ing Volk­swa­gen in court could prove that top exec­u­tives were aware of or direct­ed the activ­i­ty.

Our patience with Volk­swa­gen is wear­ing thin,” New York’s attor­ney gen­eral, Eric T. Schnei­der­man, said. “Volkswagen’s coop­er­a­tion with the states’ inves­ti­ga­tion has been spot­ty — and frankly, more of the kind one expects from a com­pany in denial than one seek­ing to leave behind a cul­ture of admit­ted decep­tion.”

He was one of sev­eral attor­neys gen­eral to express dis­sat­is­fac­tion in response to inquiries from The New York Times.

“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,” said Connecticut’s attor­ney gen­eral, George Jepsen. “We will seek to use any means avail­able to us to con­duct a thor­ough inves­ti­ga­tion.”


When he was named chief exec­u­tive short­ly after the scan­dal broke, Matthias Müller [17] said “My most urgent task is to win back trust” and promised “max­i­mum trans­parency [18].” But open­ing up a com­pany known for its par­tic­u­larly insu­lar cul­ture [19] has been a tall order.

Ger­man inves­ti­ga­tors are not mak­ing sim­i­lar com­plaints about Volk­swa­gen. Klaus Ziehe, a spokesman for pros­e­cu­tors in Braun­schweig, a city close to Volkswagen’s head­quar­ters in Wolfs­burg, said that under Ger­man law, pros­e­cu­tors were allowed to car­ry out raids of Volkswagen’s Wolfs­burg offices to gath­er pos­si­ble evi­dence that could include email exchanges. He did not elab­o­rate on what they had found.

“We are not and do not want to be depen­dent on that which Volk­swa­gen gives us,” Mr. Ziehe said in a writ­ten response to ques­tions. At the same time, he said, the com­pany had been work­ing with Ger­man inves­ti­ga­tors.

“We can’t com­plain about our coop­er­a­tion with the com­pany,” Mr. Ziehe said. “We have the impres­sion that we have received every­thing that we have specif­i­cally request­ed.”

Volk­swa­gen, in a state­ment, said it could not com­ment on con­tin­u­ing pro­ceed­ings.

Ger­many, a close ally of Amer­ica, is known for strict pri­vacy laws like its Fed­eral Data Pro­tec­tion Act, which lim­its access to data, par­tic­u­larly out­side the Euro­pean Union. And it is not the only Euro­pean coun­try with pri­vacy laws; sim­i­lar issues with Swiss laws have also ham­pered Amer­i­can inves­ti­ga­tors in their pur­suit of FIFA, soccer’s world gov­ern­ing body. Strains over data-shar­ing between the Unit­ed States and Europe also emerged after the spy­ing rev­e­la­tions linked to Edward J. Snow­den, the for­mer Nation­al Secu­rity Agency con­trac­tor.

Ger­many also has a his­tory of refus­ing to extra­dite [20] its cit­i­zens to the Unit­ed States. Still, Amer­i­can inves­ti­ga­tors have dealt with Ger­man cor­po­ra­tions for many years and often reach ami­ca­ble set­tle­ments.

The Unit­ed States, where the scan­dal orig­i­nated, is seen as poten­tially con­duct­ing tougher inves­ti­ga­tions of Volk­swa­gen than Ger­many, where the car­maker is one of the nation’s largest employ­ers. Pros­e­cu­tors in Braun­schweig ini­tially said they would con­duct a for­mal inves­ti­ga­tion of Mar­tin Win­terkorn, V.W.’s for­mer chief exec­u­tive, but quick­ly back­tracked [21].

The Jus­tice Depart­ment, which filed a civ­il suit against Volk­swa­gen this week, has not ruled out fil­ing a crim­i­nal charge or tar­get­ing spe­cific exec­u­tives. A Jus­tice Depart­ment spokesman declined to say whether it was fac­ing obsta­cles in its own inquiry.

Lack­ing access to offi­cials at Volk­swa­gen head­quar­ters makes it more dif­fi­cult to deter­mine who was respon­si­ble for the wrong­do­ing, William H. Sor­rell [22], the Ver­mont attor­ney gen­eral, said in a recent inter­view in Burling­ton. “One of the things that’s impor­tant to the state and oth­ers in terms of look­ing at the egre­gious­ness or seri­ous­ness of the con­duct is who at Volk­swa­gen knew what and when,” Mr. Sor­rell said.

“It doesn’t make this attor­ney gen­eral feel all warm and fuzzy,” he said, that infor­ma­tion “has been com­ing out as grad­u­ally as it has been.”

Mr. Schneiderman’s office declined to com­ment on whether Amer­i­can inves­ti­ga­tors were col­lab­o­rat­ing with Ger­man pros­e­cu­tors. In declin­ing to turn over evi­dence to Amer­i­can inves­ti­ga­tors, Volk­swa­gen has prin­ci­pally cit­ed the Ger­man Fed­eral Data Pro­tec­tion Act [23], an aide said in an email, as well as the Ger­man Con­sti­tu­tion, the Euro­pean Con­ven­tion on Human Rights, deci­sions of the Ger­man Con­sti­tu­tional Court and the Euro­pean Court of Human Rights, “and (for good mea­sure) pro­vi­sions of the Ger­man Crim­i­nal Code.”

Volk­swa­gen has main­tained that a rel­a­tively small num­ber of engi­neers and man­agers were respon­si­ble for the cheat­ing. None of the nine Volk­swa­gen exec­u­tives who have been sus­pended in con­nec­tion with the scan­dal were mem­bers of the man­age­ment board. But sev­eral, like Wolf­gang Hatz [24], who head­ed engine and trans­mis­sion devel­op­ment, report­ed direct­ly to mem­bers of the board.

The rev­e­la­tions may raise ques­tions about the com­mit­ment of Mr. Müller [17] to clean­ing house. He was a pro­tégé of Mr. Win­terkorn and has close ties to a num­ber of the cen­tral fig­ures in the inves­ti­ga­tion. He was V.W.’s head of prod­uct plan­ning when the cheat­ing took place.

In a tac­it admis­sion by Volk­swa­gen that it needs to smooth tense rela­tions with Amer­i­can offi­cials, Mr. Müller will meet with Gina McCarthy, the E.P.A. admin­is­tra­tor, on Wednes­day at the company’s request, a spokes­woman for the agency said.

Offi­cials at the office of the Texas attor­ney gen­eral had no imme­di­ate com­ment. The Cal­i­for­nia attor­ney general’s office declined to com­ment.

The Envi­ron­men­tal Pro­tec­tion Agency, along with reg­u­la­tors in Cana­da and Cal­i­for­nia, have also accused [25] Volk­swa­gen of installing devices to cheat on emis­sions tests on more vehi­cles than acknowl­edged, a claim Volk­swa­gen dis­putes.

Ger­many has faced crit­i­cism in the past for laws that place a high­er val­ue on per­sonal pri­vacy than pub­lic inter­est. Ger­man con­fi­den­tial­ity laws may have pre­vented doc­tors from inform­ing the Ger­man air­line Lufthansa that one of its pilots, Andreas Lub­itz [26], was under­go­ing treat­ment for depres­sion. In March, Mr. Lub­itz delib­er­ately crashed [27] a pas­sen­ger jet oper­ated by the Lufthansa sub­sidiary Ger­man­wings into a moun­tain in France, killing him­self and 149 oth­ers who were aboard.

“In the E.U., data pro­tec­tion is a fun­da­men­tal right that is in the Euro­pean char­ter,” said Paul M. Schwartz, a law pro­fes­sor at the Uni­ver­sity of Cal­i­for­nia, Berke­ley and co-direc­tor of its Cen­ter for Law & Tech­nol­ogy. The Ger­man fed­eral con­sti­tu­tional court has also iden­ti­fied a right to “infor­ma­tional self-deter­mi­na­tion,” he said. Such laws are “real obsta­cles,” he said, adding, “Euro­peans real­ly take pri­vacy seri­ous­ly.”

Still, while Amer­i­can reg­u­la­tors have faced chal­lenges before from Euro­pean cor­po­ra­tions, the lev­el of frus­tra­tion in the Volk­swa­gen case is strik­ing. Philip Urof­sky, a part­ner at Shear­man & Ster­ling and for­mer assis­tant chief of the Jus­tice Department’s fraud sec­tion, said, “Obvi­ously, a Euro­pean com­pany ought to first and fore­most fol­low its own domes­tic laws.”

That said, pri­vacy laws have the poten­tial to be mis­used by com­pa­nies. “They frankly tie U.S. inves­ti­ga­tors’ hands, or even law firms doing inter­nal inves­ti­ga­tions, in ways that, in my per­sonal opin­ion, were not antic­i­pated or expect­ed,” Mr. Urof­sky said.

Such issues as the invok­ing of pri­vacy laws are “not fre­quent, but they’re also not unusu­al,” said Ben­jamin M. Lawsky [28]for­mer super­in­ten­dent [29] of the New York Depart­ment of Finan­cial Ser­vices and a for­mer top offi­cial in the state attor­ney general’s office. But, he said, “it is the rare case that it ends up being a total obstruc­tion.”

Mr. Lawsky left the depart­ment last year, short­ly after it was involved in a a $2.5 bil­lion set­tle­ment [30] with Deutsche Bank over alle­ga­tions that it had manip­u­lated inter­est rates.

While he did not want to draw analo­gies to his own pre­vi­ous cas­es, Mr. Lawsky called such issues frus­trat­ing. Still, he said, inves­ti­ga­tors some­times even­tu­ally find ways to get what they want — whether by get­ting the infor­ma­tion from Amer­i­can com­puter servers, through nego­ti­a­tions with com­pa­nies or in coop­er­a­tion with for­eign law enforce­ment.

“Often when you start dig­ging down, those rules are sub­ject to inter­pre­ta­tion,” he said. “If you real­ly push at how those rules have been inter­preted, you some­times can find ways to get around them.”

“Merkel’s Mobile Habit” by Chris Bryant; Finan­cial Times [Blogs]; 10/24/2013. [10]

. . . . Ger­man cor­po­rate exec­u­tives have long assumed that their mobile phone calls could be mon­i­tored.

At com­pa­nies such as car­mak­er Volk­swa­gen and chem­i­cal com­pa­ny Evonik, it is stan­dard prac­tice for mobile phones to be left out­side pri­or to board­room dis­cus­sions or when in sen­si­tive meet­ings on for­eign trips.

“Our secu­ri­ty peo­ple col­lect up the mobile phones and put them to one side” Audi board mem­ber Ulrich Hack­en­berg told the FT last month. . . . 

“Design­ing Cars for Hitler: Volk­swa­gen and Porsche’s Nazi Roots” by Diet­mar Hawranek; Der Spiegel; 7/21/2009. [14]

. . . . Porsche’s son-in-law, Anton Piëch, began man­ag­ing the plant in 1941. In his study “The Volk­swa­gen Plant and Its Work­ers in the Third Reich,” the Ger­man his­to­ri­an Hans Momm­sen writes: “In the sum­mer of 1943, Anton Piëch blunt­ly declared that he had to use cheap East­ern work­ers in order to ful­fill the Führer’s wish that the Volk­swa­gen be pro­duced for 990 Reichs­mark.”

In the ear­ly 1990s, this part of the his­to­ry of the VW Group caught up with Fer­di­nand Piëch, the son of the for­mer plant direc­tor Anton Piëch. Fer­di­nand Piëch, the head of Audi, was try­ing to rise to the top of the Volk­swa­gen Group.

Piëch, who had pushed aside a num­ber of exec­u­tives along his career path, had his share of ene­mies. Some of them spread the rumor that Piëch was inca­pable of being the head of VW, hint­ing at the head­lines it would pro­duce in the impor­tant US mar­ket if the son of the for­mer Wolfs­burg plant direc­tor, who had used forced labor­ers, became the head of the mod­ern-day VW Group.

Fer­di­nand Porsche him­self served Hitler dur­ing the war as the head of his tank com­mis­sion. He sup­port­ed Hitler’s pow­er and prof­it­ed from the regime. . . . An Allied inves­tiga­tive com­mis­sion lat­er declined to file charges against Porsche, although he, his son Fer­ry and his son-in-law Anton were impris­oned in France for sev­er­al months. . . .

Mar­tin Bor­mann: Nazi in Exile; Paul Man­ning; Copy­right 1981 [HC]; Lyle Stu­art Inc.; ISBN 0–8184-0309–8; p. 25. [15]

. . . . Present were Dr. Kas­par rep­re­sent­ing Krupp, Dr. Tolle rep­re­sent­ing Rochling, Dr. Sin­ceren rep­re­sent­ing Messer­schmitt, Drs. Kopp, Vier, and Beer­wanger rep­re­sent­ing Rhein­metall, Cap­tain Haberko­rn and Dr. Ruhe rep­re­sent­ing Bussing, Drs. Ellen­may­er and Kar­dos rep­re­sent­ing Volk­swa­gen­werk, engi­neers Drose, Yanchew, and Kopp­shem rep­re­sent­ing var­i­ous fac­to­ries in Posen, Poland (Drose, Yanchew, & Co., Brown-Boveri, Herkuleswerke, Buschw­erke, and Stadtwerke); Dr. Mey­er, an offi­cial of the Ger­man Naval Min­istry in Paris; and Dr. Stross­ner of the Min­istry of Arma­ment, Paris. . . .

Mar­tin Bor­mann: Nazi in Exile; Paul Man­ning; Copy­right 1981 [HC]; Lyle Stu­art Inc.; ISBN 0–8184-0309–8; p. 281. [15]

. . . . But it is just as true that the riv­er of wealth back into West Ger­many from assets sequestered by Mar­tin Bor­mann and the cor­po­ra­tions that par­tic­i­pat­ed in his bril­liant­ly con­ceived pro­gram of flight cap­i­tal was a major force in the recov­ery of the nation–and the best-kept secret in all of Ger­man his­to­ry. The return of cap­i­tal start­ed slow­ly. As fac­to­ries were rebuilt and revved up for pro­duc­tion, mon­ey from Swiss bank accounts rep­re­sent­ing their secret accounts flowed into the Rhineland. It was termed invest­ment mon­ey, and the first com­pa­nies to enjoy its impact were those with demand prod­ucts: auto­mo­biles, steel and chem­i­cals. Fer­di­nand Porsche, who designed the famed “Tiger” tank, redisigned Hitler’s “peo­ple’s car,” the Volk­swa­gen, and a new fac­to­ry was erect­ed to turn it out. . . .