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Why Volkswagen should face criminal charges for its clean diesel scandal

Criminal justice expert Mark Kleiman has described the Volkswagen clean diesel scandal as a story that "reads like the most paranoid anti-corporate fantasy, until you get to the line where the firm admits what it did."

For years, the company installed elaborate software in 11 million "clean diesel" cars to look like the vehicles' pollution controls worked just fine during emissions tests, but on the road the cars were spewing toxic, smog-forming nitrogen oxides into the atmosphere — potentially killing hundreds of people worldwide each year.

Kleiman, of New York University's Marron Institute, has argued in several blog posts that Volkswagen and the people involved should face criminal charges, which state and federal officials are considering. The idea is criminal charges for such a public scandal would set a very clear example: If you're a major car company and don't take these regulations seriously or try to illegally evade them, you will be held accountable for the harms caused.

"The long-term goal here is to have people in all organizations, including corporations, doing the right thing," Kleiman said. "Criminal law and civil law are just means to an end. But categorizing something as a crime does change people's attitudes toward it. And I think there's a relaxed environment toward health and safety regulations, and that needs to change."

I spoke to Kleiman by phone on Monday about why he believes criminal charges are necessary in the Volkswagen scandal. What follows is a transcript of our conversation, edited for length and clarity.

German Lopez: Explain the case for filing criminal charges against Volkswagen.

Mark Kleiman: Well, the first question: whether to press criminal charges against the company or the people involved. At the company level, it matters a little bit less whether you call something a criminal penalty or a fine — all you can take from a company is money. But I think it would be morally appropriate to categorize what the company did as a crime.

There's been a movement — and this is part of the right-wing version of criminal justice reform — to decriminalize regulatory violations. That's a lot of what the Koch-funded criminal justice groups like Right on Crime are about. And I agree that people shouldn't go to jail for filling out the paperwork incorrectly. But when it's a health and safety regulation, and people are actively cheating to get around it, and human beings get hurt or die, that seems to me appropriate criminal matter.

The long-term goal here is to have people in all organizations, including corporations, doing the right thing. Criminal law and civil law are just means to an end. But categorizing something as a crime does change people's attitudes toward it. And I think there's a relaxed environment toward health and safety regulations, and that needs to change. So that's the policy argument for treating this as a crime.

The moral argument for treating this as a crime is that people got hurt. People have been doing a cost analysis about whether the excess pollution was more than made up by the savings in fuel. Huh? That seems to belie a very important moral distinction.

German Lopez: So pressing criminal charges against Volkswagen and the people involved is about setting an example to other companies. Basically, the company's actions killed potentially hundreds of people. That's a line you can't cross.

Mark Kleiman: Right. One thing is people need to be aware that bad things will happen to them if they or their company do bad things.

It's also teaching the function of law: Because of cognitive dissonance, there's a coupling between how severely crime is punished and how bad people think the crime is. I think one of the reasons drunk driving and domestic violence are now taken more seriously in moral terms is because they're punished more severely than they used to be.

So for all the reasons we have criminal laws, the application of law is appropriate in this case.

Another thing is the existence of criminal penalties has a powerful loosening effect on people's tongues. There's information you can get in a criminal case that you can't get without. In my blog post last night, I mentioned setting up a hotline for these types of cases [that lets workers call in wrongdoing] — if we do that, in a week, we'd know about management and other companies that are doing the same kind of stuff.

But if these guys get away without criminal justice charges, that would send a very strong signal of the wrong kind.

German Lopez: You mentioned in one blog post the idea of "working up the chain." That happens a lot with criminal organizations [in which people rat out on their bosses to avoid criminal charges or to get toned-down sentences in a deal], and it seems like a criminal investigation could reveal if higher-ups at Volkswagen were aware of what was going on.

Mark Kleiman: Right.

I would be amazed if the chairman wasn't aware this was going on. The description in the Los Angeles Times suggests a level of corporate awareness. When the EPA rejected Volkswagen's test, the company said, "Oh no, you must have done something with the test." Then the EPA said, "No, no, no. We're not going to certify you until you tell us what the hell's going on." And suddenly Volkswagen admits it has a defeat device. So it's hard to imagine there wasn't any knowledge up and down the chain.

German Lopez: What kind of charges are we speaking about here?

Mark Kleiman: At the state level, you could certainly make a case for voluntary manslaughter.

Anything worse, it depends on the nature of each state's felony murder rule. The general rule of law is that if I engage in a criminal act in which there's a risk of death, and death ensues, then I'm guilty of felony murder, even if I didn't intend the death. So for example, if you and I go to rob a bank, and the bank guard shoots and kills you, I can be charged with felony murder, because I engaged in a criminal action likely to cause somebody's death and it happened. That's a fairly extreme move — not one I disapprove of, but there are questions there.

The obvious one at the federal level is 18 USC 1001: It's considered a felony to make a material false statement to a federal official in a matter within that official's jurisdiction.

That's the thing Martha Stewart went down on. When the FBI asked her about insider trading, she said no, and it was yes. And even though it turned out the insider trading itself wasn't against the law, the false statement she made sent her to prison.

So here's a massive conspiracy with Volkswagen to make a set of false statements. And again, the conspiracy rule is that once there's an agreement to break the law, any act taken in support of that, even if that act itself isn't illegal, puts you in the conspiracy mode. So the guy who writes the press release denying it is guilty of a felony.

German Lopez: One of the compelling cases against criminal charges that I've seen is that pressing these charges would hurt a bunch of people in the company who weren't aware of what was going on. How concerned are you about that?

Mark Kleiman: Well, the company made a bad business decision. How is this different than if the company had designed a bad car? People work for companies where their management makes bad business decisions, and they get hurt. That's the nature of the business. So I don't think you take that into account very much.

Now, there's a different question if you deliberately set out to put the company out of business. That would destroy a lot of value, but there's a case for it.

Putting that company and management out of business doesn't necessarily end the existence of Volkswagen cars. All that engineering, all the factories are all sellable assets in a bankruptcy auction. Companies go out of business all the time, and go through mergers and acquisitions, and the workers don't even notice.

So it's possible to punish the shareholders and management without destroying the enterprise. Or you could just not do that and take a large charge of their equity with fines and other penalties. It depends how far you want to go.

Watch: A visual tour of the world's CO2 emissions

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