Hiltrud Werner, VW Board for Integrity
VW must continue to work on itself, says Werner.
(Photo: Michael Loewa / laif)
Dusseldorf VolkswagenLegal Board Hiltrud Werner sees significant progress in cultural change, which was initiated after the announcement of the diesel scandal almost four years ago in the group. “More than 80 percent of the clues come to us now with Quelle,” said Werner in an interview with Handelsblatt on the preliminary results of the new whistleblower system.
At first it was only 15 percent, the vast majority of the evidence of possible wrongdoing had been submitted anonymously at that time. The growing confidence “is very clear,” says Werner.
Even the monitor used by the US Department of Justice Larry Thompson must VW certify this cultural change. The monitor would leave Wolfsburg in the summer of next year, if it certifies the Group a sustainable change process.
“Board for Integrity and Law” is the official title of the only woman on the Volkswagen Group Board of Management. The post was created almost four years ago in Wolfsburg, after the diesel scandal had shaken the company. Her key tasks include working with Thompson.
Legal Director Werner sees VW on the right path: “Clarity of competencies and processes will help ensure that there are no more legal violations.” In the upcoming test phase of the monitor Werner does not want to be put under pressure.
Volkswagen not only had to comply with the rules on integrity and compliance at a certain deadline, but also permanently and consistently. “‘Right’ is more important to us in this case than ‘on time’,” she emphasized. The monitor will only see its mission fulfilled, “if Volkswagen remains permanently scandal-free.”
Read the complete interview with Hiltrud Werner here:
Two out of three years of Larry Thompson’s monitoring process are over. What happened during this time In the middle of 2016, we developed the Group strategy until 2025 and in 2017 reformulated our Code of Conduct, with the support of the Monitor. In addition, we have deepened the basic root cause analysis of the diesel scandal. That was a very central task: Only if you know exactly what went wrong, changes take effect in the right place. Compliance was strengthened organisationally and personally, a whistleblowing system was created in addition to the ombudsman system, integrity management was established and far-reaching cultural initiatives were initiated.
The development department was the core of the diesel affair. What happened there? We have organisationally separated the engine development, test benches and registration area and set “golden rules” for vehicle development. More than 2,000 employees have been given new job descriptions, and over 20,000 pages of process descriptions have been updated. Clarity of competences and processes will help to ensure that there are no more violations of the law. Again, this was achieved in a very close dialogue with the monitor.
Important are the interim reports of the monitor. That’s right. In March 2018, Larry Thompson submitted his first report, a year later his second. The first time, 32 fields of activity were identified, mainly in the areas of compliance, integrity, risk management and corporate culture, the second time there were 15 more.
And now there will be a third report in November – when we have implemented all the recommendations from the first and second monitor reports and installed the corresponding processes, we have met the measurable certification criteria. However, the monitor method is not an exercise to check off, where Larry Thompson simply looks at individual test criteria. The certification also includes a subjective assessment by the monitor, with the entire image of the company playing a central role. And yes, we will receive another report later this year.
What changes does Larry Thompson wish for? It is about identifying possible misconduct in advance and not even causing problems and that we develop and produce our vehicles in accordance with the law, In addition, the environmental requirements under the agreements with the US authorities must be met.
In other words: These are all conditions to prevent a second diesel scandal? Quite. In our processes, for example, it must be ensured that there is transparency towards the authorities, for example through a clear traceability of the technical documentation. Here, too, we still have to regain confidence, so it is essential that we continue to work intensively.
“We are on the right path”
Let’s summarize the first two years: Under the supervision of the monitor, an institutional framework has emerged. Now in the final test phase, it is checked, if everything works, so you can formulate it. In the first two years we initiated long-term, sustainable changes, but we did not know exactly where the bar would be in 2020 because we did not know the certification criteria. From the recommendations in the monitor’s interim reports, we now know which direction to go and how to prioritize. Even without further monitoring recommendations, we know what we still have to deal with throughout the Group and worldwide.
They have changed the institutional framework by training employees in matters of compliance. But have the changes really gone in your head? I am very confident here. Originally, 151 Group companies, which together employ 80 percent of all employees, were to be trained by the end of the year. Now we are expected to reach 200 group subsidiaries. Worldwide, we meet a motivated team with a lot of initiative. We have now reached more than 300,000 employees with our program. We travel the world, including Russia, China, South Africa and Brazil. It is important that we act in a risk-oriented manner and, in any case, reach the regions early, where, according to internationally recognized indices, there is a greater risk of corruption.
That’s interesting for the monitor, and that’s exactly what Larry Thompson will now review: Has the culture of integrity arrived at the staff? Theoretically, he could go into production tomorrow in Zwickau or Puebla and ask an employee if he has ever heard of the new corporate principles and why compliance with laws is so important.
And will Larry Thompson do that? From the beginning, Larry Thompson has always said that it is very important to him that the changes come to people. There is also an in-house survey of the company’s integrity and compliance monitor from the end of last year. The results have shown that we are on the right track.
How can this be fixed? Our employees say in the polls that much has changed in the last three years. For example, they feel better informed, the permeability between the individual areas has increased. The direct supervisors enjoy a high degree of trust from their employees. They ask more often and more offensively, where the employees push the shoe. For the majority of employees, the changes have become noticeable. They confirm that the Group really is serious about cultural change.
“The protection of whistleblowers seems to succeed us”
What is really important from the point of view of the company? In the whistleblower system there is a very good indicator for this: how many clues are given anonymously, how many by naming the name? Of course, when employees reveal their identity, the investigation is much more efficient. Because with it, questions about the facts are possible. When our employees call their name, they trust our processes. The protection of whistleblowers seems to us to succeed so well – even if a fact is perhaps pointless.
How do you measure that? More than 80 percent of the clues come from Source. At the beginning that was 15 percent. The growing trust is very clear. The absolute number of hints would not be helpful size. It is also crucial that the company reacts consistently, quickly and decisively when there have been serious violations.
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Let’s get back to the upcoming trial by Larry Thompson. What exactly will the monitor look at now? The first point is corporate governance: how do the management and supervisory boards manage the company? Second, it’s about structures, resources and budgets: is there enough money for the compliance issues? Thirdly, we will have to prove that we have reached all employees on the topics of integrity, compliance and corporate values.
Furthermore, procedural issues will play a role. Do compliance, the whistleblowing system, risk management and also the control instruments work? Does the company react quickly and appropriately to process deviations through appropriate escalation mechanisms? The sixth element concerns communication, information and training – is the topic of integrity permanently integrated into the processes and lived? In addition, we must ensure that all business partners have been involved. In the end, our IT has to work properly. This includes ensuring that important documents are archived in a legally secure manner.
How much time do you have left? What’s the schedule? Let’s reckon: The Monitor’s three-year term expires next June. In April 2020, Thompson will submit its certification report to the US Department of Justice. This in turn means that he probably collects the status from February. For us, this means that the trial should be completed by January at the latest. We also need to schedule time for corrections based on the test results.
“Compliance hurts sometimes”
Are you coming to grips with this tight timeframe? Volkswagen is a company that works very hard with milestones, deadlines and deadline pressure – this comes from vehicle manufacturing, where fixed model cycles are part of everyday business. That should work. However, with all thinking in terms of deadlines, we must not forget that this whole process is about sustainability. Volkswagen should not only comply with the rules on integrity and compliance on a specific date, but also permanently and consistently. “Right” in this case is more important to us than “punctual”. So if we see any need for optimization by the end of the year, then we will take the time to implement it.
But if you could not meet the June deadline next year, would not it be disgusting for you and the company to regain confidence only if we have made processes, systems and structures robust? For his part, Larry Thompson will be thorough and conscientious in the certification. Compliance needs sustainability, costs money and sometimes hurts. We do our best, but not for the monitor or any appointment, but for us, our company and our customers.
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Can you really be so calm? Believe me, I’m not relaxed, but very focused. Larry Thompson and Volkswagen have one goal in common: we want to work together to ensure that the certification criteria are met. The monitor must have achieved what he wanted to achieve when he leaves us again. He will only see his mission fulfilled if Volkswagen remains permanently scandal-free.
Dare to say what the expected last year of the monitor in Wolfsburg will look like? We will not be bored. Everything depends very much on the results of the test phase and on the question of whether there will be a greater need for correction afterwards. It could also be that we can see a trend in the monitor’s November report.
Are there signals from Larry Thompson? It’s his very personal decision in the end. However, he has repeatedly emphasized publicly that he expects a system that works “appropriately and efficiently”. Larry Thompson always says, “Think of a Golf, not a Golf Audi A8. “
Ms. Werner, thank you for this interview.