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VW’s former CEO pays dearly for crisis misconduct—PR lessons for brands

by | Jun 16, 2021 | Analysis, Public Relations

After a long settlement procedure, the Volkswagen Group is now set to receive about $14 million from its former chairman Martin Winterkorn. Back in March, the supervisory board for the corporation reviewed all of the findings regarding the “dieselgate” scandal from 2015.

Back in 2015, the company was uncovered to have been using illegal software in a number of its vehicles in an attempt to cheat the pollution tests for cars in the US. A week after the news surfaced, Winterkorn ended up stepping down from his COP position, and in 2017, the company pleaded guilty to criminal charges, agreeing to pay over $4 million in penalties.

Additionally, the other board members, along with Audi AG’s Chairman Rupert Stadler are going to be paying nearly $5 million in the same settlement, while VW is also receiving compensation payments from its insurance. The company released a statement that the former CEO “breached his duties of care” during his position at Volkswagen, by using unlawful software and by not clarifying the circumstances around the software’s use.

Meanwhile, in the German parliament, Berlin prosecutors charged the former CEO of Volkswagen for false testimony. German lawyers did extensive reviews of the liability claims on behalf of the supervisory board at VW, and ended up submitting their final results back in March. This particular investigation was named as one of the most complex and comprehensive in German economic history, because the investigation lasted for a period of more than five years.

Back in 2015, when the former CEO Winterkorn first resigned, after denying any wrongdoing, he ended up paying over $35 billion in fines, compensations to the car owners, and recall costs. There were emission problems in 2014, and US environmental regulators were notified of the issues from a study.

The crisis comms takeaway for brands

When a company faces such a communications crisis such as this, which involves high-level employees in management positions, it’s best to work with a communications expert. To navigate misconduct situations, it’s best to also assemble a team of human resources personnel and lawyers, aside from public relations professionals.

Companies should also be as transparent as possible, especially in cases where regulators are involved. These types of situations frequently receive a lot of media coverage, so being transparent with journalists and the public is important as well.

Aside from working with experts who understand how to best navigate such situations, a company should also be detailing the steps it will be taking to address the problem and prevent similar incidents from happening in the future. Any correspondence with officials, journalists, or the public should be carefully crafted and reviewed before being published, and company policies should be updated accordingly.

Many companies tend to create a PR crisis team long before any sort of crisis situation happens. This team then creates a crisis response plan which outlines which steps the company should take in various crisis scenarios. The best way to navigate any PR crisis is to be well prepared beforehand. Companies that aren’t prepared generally suffer more reputational damage and lose a lot of trust with their audiences and the general public.

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Ronn Torossian
Ronn Torossian is the Founder and CEO of 5W Public Relations: 5WPR is one of the 20 largest PR Firms in the United States.

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