Corporate compliance scandals 2015

January 01, 1970 by Mark Dunn

The scandal of VW's faked emissions tests threatens the very survival of the world's largest car maker. Meanwhile, Sepp Blatter, the head of FIFA, has finally been implicated in the various corruption investigations into football's governing body.

Organisational failure in two of the world's biggest brands

Volkswagen, the totem of German manufacturing success, is left facing a potentially ruinous reputational and financial loss after admitting that as many as 11 million cars worldwide may have been fitted with software designed to rig emissions tests by artificially reducing nitrous oxide (NOX) emissions. The full details of the scandal having yet to emerge but it is already wreaking havoc on the company with the dismissal of three senior executives and the resignation of CEO Martin Winterkorn. The company has already set aside more than $6 billion in the US to cover legal proceedings and compensation – a figure that many commentators feel will only grow.

Sepp Blatter has been accused by Swiss prosecutors of making a £1.6 million "disloyal payment" to the head of UEFA, the governing body of football in Europe, Michel Platini. The Frenchman and former European Championship winner is being treated as someone "in between a witness and an accused person" by the authorities in Switzerland. Although both men have denied any wrongdoing, the allegations centre on an alleged payment made to Platini in 2011 for work that he did almost 10 years earlier.

Already former president, Jack Warner, has been banned from football for life over alleged offers and acceptance of illegal payments. Warner, a former head of the Caribbean and North and Central American Football Association (CONCACAF) is also fighting extradition to the US on charges of corruption and the acceptance of millions of dollars in bribes.

Due diligence and compliance the key to future rehabilitation

For both these organisations – one a giant of global manufacturing and the other the second-most powerful body in world sport – the road back to probity and public trust promises to be a long and arduous one. The allegations facing VW and FIFA appear to suggest that both have suffered catastrophic due diligence failures and this is where their paths to rehabilitation will have to start.

Re-establishing trust with consumers and football-loving world starts with robust compliance programmes to ensure that in the future both VW and FIFA are whiter than white. No matter the size of the organisation, a strong compliance programme starts at the top and should be properly communicated through every layer or management and staff. It will include ensuring compliance officers have the authority to enforce a reporting process.

Entity monitoring, ensuring that the group conducts due diligence on dealings with politically exposed persons (PEPs) will also be central to the rehabilitation of both VW and FIFA.

Proactive and thorough compliance

Neither organisation can afford a further scandal and needs to be seen to be whiter than white. Both organisations will be under the microscope for years to come. It remains to be seen whether either will survive these separate compliance disasters in their current forms but if there is to be redemption, it must come from strict compliance regimes that are understood and followed at every level and every location.

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