Corporate Governance Of Gas Scandal In The Automotive Industry
KOÇ UNIVERSITY
GRADUATE SCHOOL OF BUSINESS
DEPARTMENT OF BUSINESS ADMINISTRATION
KALENDER AKGÜL
MGMT 512: Corporate Governance
Exam-I
SUPERVISOR
Aymelek KOZİKOĞLU
ISTANBUL
2017
1 | P a g e
ABSTRACT
Volkswagen gas emission problem is of the major scandal in automotive industry in 2015.
This paper defines the reason of scandal as a corporate governance case. The reason of problem,
decision of VW management, and problem solving method is defined in this article.
2 | P a g e
Table of Contents
ABSTRACT ......................................................................................................................................................
…show more content…
It was known that nearly half million of vehicles were effected from this
problem in USA, and 11 million in Europe and Asia [4-]. The problem was not a technical issue,
it was claimed that VW board of management hide this problem. For that reason, company had
lost about 25 billion € of their shares in a short time.
The main question is that why VW made this big mistake that it would drag itself into
the business. One of the article about the subject claims that, brand manager Wolfgang Bernhard
and engineer Rudolf Krebs were working on the new diesel engine to be used in the US [4-].
However, it is defined that it has $ 335 cost per vehicle to bring vehicles to US emissions
standards. However, it is also asserted that head of Volkswagen 's finance department found this
cost very high and for that reason they suggested another way to solve this important issue.
Hence, they improved a new software or device that realizes that vehicle is in test condition. This
dishonesty situation caused that VW to save nearly 4 billion € in total. However, they lost 25
billion € of their shares in a short time and also VW was punished that to pay 15 billion €. In
addition to that, they called back nearly 600000 vehicles
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