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Justice served

28 June 2016 By Olaf Storbeck

America’s top cops can still take a bite out of Volkswagen. The German carmaker will pay up to $15 billion for its emissions scandal in a civil settlement. Though a lot of money, it is in line with regulatory tallies based on the number of vehicles involved. But a criminal case is still pending that offers to test the Department of Justice’s pledge to better hold individuals liable for corporate misconduct.

Ever since the 2008 financial crisis, prosecutors have been criticized for not holding more executives accountable. The DOJ has argued that failure to jail any Wall Street bigwigs was not for lack of trying, evidence just wasn’t there. Still, the drumbeat has only gotten louder, with senators like Elizabeth Warren and Bernie Sanders manning the percussion.

Authorities attempted to address these concerns with new guidance for prosecutors. Deputy Attorney General Sally Yates issued a memo last September saying individual accountability must be a priority in corporate probes, with companies getting credit only if they provide all information on culpable employees. The memo came out just as news was breaking about the VW emissions scandal.

The government’s probe could ensnare a variety of VW employees. The carmaker has blamed the fraud on rogue engineers and claimed that executives were not aware of the cheating scheme. That remains to be proven, but the U.S. case goes beyond the masterminds of the emissions ruse. The Justice Department and the Environmental Protection Agency also allege that after abnormalities were found, VW concealed and omitted information, effectively obstructing the investigation.

It’s harder to make cases against individuals, who are prone to fight back more than companies. Earlier this month, prosecutors decided not to pursue a civil case against former Countrywide Financial Chief Executive Angelo Mozilo, who had already avoided criminal charges. The firm collapsed in 2008 under the weight of subprime mortgages and was acquired by Bank of America.

Still, the Justice Department has taken on the higher-profile burden of proving it can hold individuals accountable for corporate wrongdoing. Attorney General Loretta Lynch also made that pledge to lawmakers before she took the helm a year ago. VW looks like the best chance to make good on that promise.


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