How VW Paid USD25 Billion for Dieselgate — And Got Off Easy
On Dec. 6, former Volkswagen engineer Oliver Schmidt was led into a federal courtroom in Detroit in handcuffs and leg irons. He was wearing a blood-red jumpsuit, his head shaved, as it always is, and his deep-set eyes seemed to ask, “how did I get here?” As Schmidt’s wife tried to suppress tears in a second-row pew, U.S. District Judge Sean Cox sentenced him to what, had it been imposed in Schmidt’s native Germany, would rank among the harshest white collar sentences ever meted out: seven years in prison.
 
Schmidt was being punished for his role in VW’s “Dieselgate” scandal, one of the most audacious corporate frauds in history. Yet his sentence brought no catharsis, least of all to Cox, who at times seemed pained while imposing it. Sometimes, he told Schmidt apologetically, his job requires him to imprison “good people just making very, very bad decisions.”
 
Schmidt was a henchman, everyone understood, and his sentence, a stand-in. The judge was addressing a set of people in Germany who are beyond the reach of U.S. prosecutors because Germany does not ordinarily extradite its nationals beyond European Union frontiers. Above all, the Detroit courtroom was haunted by the shadow of an individual who was absent: Martin Winterkorn, who was VW’s CEO during almost all of the fraud. His name was uttered only twice, yet his aura loomed over the entire hearing.
 
The outlines of the scandal are well known. For nearly a decade, from 2006 to September 2015, VW anchored its U.S. sales strategy — aimed at vaulting the company past Toyota to become the world’s No. 1 carmaker — on a breed of cars that turned out to be a hoax. They were touted as “Clean Diesel” vehicles. About 580,000 such sedans, SUVs and crossovers were sold in the U.S. under the company’s VW, Audi and Porsche marques. With great fanfare, including Super Bowl commercials, the company flacked an environmentalist’s dream: high performance cars that managed to achieve excellent fuel economy and emissions so squeaky clean as to rival those of electric hybrids like the Toyota Prius.
 
It was all a software-conjured mirage. The exhaust control equipment in the VW diesels was programmed to shut off as soon as the cars rolled off the regulators’ test beds, at which point the tailpipes spewed illegal levels of two types of nitrogen oxides (referred to collectively as NOx) into the atmosphere, causing smog, respiratory disease and premature death.
 
At first, Volkswagen insisted the fraud was pulled off by a group of rogue engineers. But over time the company has quietly backed away from that claim, increasingly focusing on protecting a small cadre of top officials. The crime may well have started among a relatively small number of engineers afraid to admit to feared top executives that they couldn’t reconcile the company’s goals and the law’s demands.
 
Over the past two years, prosecutors in the U.S. and Germany have been tracing who was aware of the scheme and have identified more than 40 people involved, spread out across at least four cities and working for three VW brands as well as automotive technology supplier Robert Bosch. In a new, potentially explosive move, some U.S. prosecutors are pushing to indict Volkswagen’s former CEO. Such a step would be largely symbolic — the U.S. has no power to extradite them — but it would send a message that the misconduct was egregious and directed from the top.
 
And it would highlight a stark contrast in punishment. U.S. authorities have extracted $25 billion in fines, penalties, civil damages and restitution from VW for the 580,000 tainted diesels it sold in the U.S. In Europe, where the company sold 8 million tainted diesels, it has not sustained any major fines, nor offered snookered owners a single Euro in compensation.
 
There’s no doubt that Schmidt was guilty. He admitted that he’d been part of a cover-up. Yet he was far from the mastermind. Schmidt claimed not to have learned…Continue Reading… 
 
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    US jury orders Johnson & Johnson to pay USD417 mn compensation
    A jury panel in California has ordered the world's largest health-care company Johnson & Johnson to award USD417 million to a 62-year-old woman with ovarian cancer.
     
    The ruling by the jury panel of Los Angeles county Superior Court came on Monday after it found the company was liable for failing to warn the woman about the cancer risks of using talcum products, Xinhua news agency reported.
     
    In the first such case going to state-court jury in California, Eva Echeverria said she used the Johnson's Baby Powder from age 11 until 2016, when she saw a news about a woman with ovarian cancer who also used the product.
     
    Echeverria, diagnosed with ovarian cancer in 2007, was too weak to show up in the court after a surgeon removed a softball-sized tumour.
     
    She said that if Johnson & Johnson had put a warning label on the product showing a linkage between talc and cancer, she would not have used it for so many years.
     
    Moreover, her attorneys stressed that Johnson & Johnson had known long ago about cancer risks of using its talcum products but still marketed the unsafe products without any warning label as some experts advised.
     
    The company argued that the plaintiff's allegations were not supported by scientific evidence and studies conducted by federal agencies, including the US Food and Drug Administration.
     
    After two days of closing arguments by lawyers, the jury decided to award Echeverria with $68 million in compensatory damages and $340 million in punitive damages.
     
    In May, a Missouri jury awarded a Virginia woman $110.5 million for a similar allegation, by then, three other Missouri juries had awarded $197 million to plaintiffs who made similar claims.
     
    There are more than 300 similar cases pending in California and about 4,800 in other courts across the US.
     
    The company immediately announced it would seek to overturn Monday's verdict, saying science supports the safety of Johnson & Johnson's Baby Powder.
     
    Talcum powder is made from talc, a mineral made up mainly of the elements magnesium, silicon, and oxygen. As a powder, it absorbs moisture well so that is widely used in cosmetic products such as baby powder and adult facial powders for keeping skin dry and helping to prevent rashes.
     
    According to the American Cancer Society, even though many studies have looked at the possible link between talcum powder and ovarian cancer, researches on this field are continuing since findings have been mixed.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    COMMENTS

    N.Hanumanta Rao

    2 years ago

    All products made/marketed by Johnson &Johnson must be banned and ordered to be removed from the shelves of all stores all over India and all advertisement s of such products must be banned . The Government must swing into action immediately.

    EU fines Google record USD 2.7 billion for abusing search monopoly
    The European Union Commission on Tuesday slapped technology giant Google with a record fine of 2.42 billion euros or USD 2.7 billion for breaching European Union (EU) antitrust rules by abusing the monopoly it enjoys over internet search.
     
    Google has hinted that it may appeal against the imposition of the mammoth fine -- the biggest ever competition fine in history. 
     
    "We will review the Commission's decision in detail as we consider an appeal, and we look forward to continuing to make our case," said a Google spokesperson in response to the ruling.
     
    In the investigation spanning seven years, Google was accused of manipulating its search engine results to favour its new shopping service at the expense of smaller price-comparison websites.
     
    "Google has abused its market dominance as a search engine by giving an illegal advantage to another Google product, its comparison shopping service," the European Commission said in a statement.
     
    "What Google has done is illegal under EU antitrust rules. It denied other companies the chance to compete on the merits and to innovate. And most importantly, it denied European consumers a genuine choice of services and the full benefits of innovation," said Commissioner Margrethe Vestager, who is in charge of competition policy.
     
    The company must now end the conduct within 90 days or face penalty payments of up to 5 per cent of the average daily worldwide turnover of Alphabet, Google's parent company.
     
    The penalty has surpassed the previous 1.1 billion euros record fine Intel was forced to pay in 2009 and the EU might also demand that Google make changes to its search results so that it was not seen to favour its own service, telegraph.co.uk reported.
     
    The investigation dates back to 2010, and was triggered by complaints from other price-comparison websites that said Google had relegated their services in its search results.
     
    Google has a 90 per cent share of internet searches in Europe, giving it a powerful tool to direct how internet users navigate the web.
     
    According to Google, its entry into online shopping space has been good for consumers and retailers, and argues that it was not a monopoly player in online shopping.
     
    "When the Commission asks why some comparison websites have not done as well as others, we think it should consider the many sites that have grown in this period -- including platforms like Amazon and eBay," a Google spokesperson said on Tuesday.
     
    Google is also fighting two other competition cases with the Commission that could see it hit with heavy fines. 
     
    European regulators have in the past investigated Microsoft, Intel, Apple, Google, Facebook and Amazon, raising claims that Brussels was waging a war against the Silicon Valley, but the claim has been denied by the Commission.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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