- Created: Monday, 07 December 2015 22:37
- Written by Cal Shaw
Cheating and fraud have become an increasingly prevalent feature of capitalism in deep crisis, so it will have come as little surprise to readers of FRFI when German automotive giant Volkswagen (VW) was exposed in September to be using special software in its cars to cheat nitrogen oxide emissions tests. These ‘defeat devices’ were fitted to vehicles to keep costs low, and performance high, whilst appearing to comply with environmental legislation. VW, like other corporations, is fighting for market share in a deepening crisis of capitalism. Subsequent revelations about other companies across the automotive industry also cheating in emissions tests revealed the truth of the words of an anonymous investment banker on a secret banking chatroom for the coordination of market manipulation: ‘if you ain’t cheating, you ain’t trying’.
The VW scandal
In 2014 the irregularity of VW emissions became apparent to researchers at the University West of Virginia who informed US authorities. In May 2015 the California Air Resource Board (CARB) undertook tests and then informed the Environmental Protection Agency (EPA). On 3 September, VW admitted to EPA and CARB that it had installed software to deliberately understate emissions in its vehicles. The EPA and CARB waited until 18 September before going public, coinciding with VW’s launch of its latest vehicle at the International Motor Show in Frankfurt.
VW is the world’s largest automotive company; it has several well-known brands as subsidiaries, including mass production car companies Audi, Seat and Skoda, and supercar companies Bugatti, Bentley, Lamborghini, and Porsche. The falsification has been identified across the diesel ranges of all of the mass production subsidiaries and some petrol models, including Porsche. The software enabled VW to programme the car’s engine management system to recognise when the wheels are turning but the car is stationary – the conditions in which a test is conducted. When this is detected, it will switch settings to produce results which comply with the regulatory amount. VW has admitted that it has been doing this since 2009 when Bosch first approached it with the software.
The attack on the German automotive industry by US environmental bodies prompted German Chancellor Angela Merkel to go on the defensive, saying on 8 October: ‘Anyone who tries to pillory the entire automobile industry because of this misconduct in one area will have to deal with the CDU [Merkel’s governing Christian Democratic Union]’. However, since the VW scandal broke, other automotive German, US and Japanese manufacturers (the three nations dominant in the sector) have been found to have ‘discrepancies’ in emission reports. All have denied wrongdoing, however in the words of Dominic O’Brien an analyst at the French investment bank Exane BNP Paribas: ‘every manufacturer has now officially denied the use of illegal software to diesel vehicles... But I would compare it to the debate over tax avoidance versus tax evasion’ (Financial Times, 14 November 2015).
The head of VW UK, Paul Willis, told MPs at Parliament’s Transport Committee on 12 October that the amendments to British vehicles would not include the fitting of a new pollution filter system as will be the case in the US because the US has tougher pollution standards. Norman Baker, the former Liberal Democrat Transport Minister, revealed on 26 September that David Cameron delayed a British emissions agreement at the expense of the environment and public health on the request of Merkel, as higher levels suit German manufacturers. The emissions test used in Britain is over 20 years old and has now been called into question by MPs who have launched an inquiry.
The fight for market share
The US is second to Germany in the automotive industry revenue standings; its top three automotive companies within the top ten trail Germany’s top three by more than $966m. This does not take into account the fact that the US’s third place company Fiat Chrysler is a merger with Italian giant Fiat. Following the scandal, VW’s shares have taken a nose dive, its reputation is tarnished and it is estimated to face lawsuits amounting to $20-60bn, though the true cost cannot yet be determined. The imperialist crisis is putting huge pressure on multinational companies to do whatever it takes to maintain or increase their market share in the face of competitors. The state plays a crucial role in backing them up. The tighter environmental standards of the EPA and CARB mean they can be used to weaken imperialist rivals by discrediting and fining some of their largest corporations. The VW scandal follows the British Petroleum (BP) lawsuit which concluded in a record fine of $20.4bn on 5 October 2015 for the Deep Water Horizon oil spill in 2010. Inter-imperialist rivalry is increasingly being played out under the guise of environmental protection.
Fight Racism! Fight Imperialism! 248 December 2015/January 2016