Business Law: Ethical Violations in the Volkswagen Emissions Scandal

This report presents a case study on the Volkswagen emissions scandal, focusing on the breach of professional ethics. The study analyzes Volkswagen's use of defeat device software to deceive the U.S. regulatory body regarding emission standards. It examines the violation of engineering codes of ethics in Australia and the American Society of Civil Engineers (ASCE). The report details the fraudulent actions taken by Volkswagen, the subsequent consequences, and the ethical implications of the company's actions. It highlights the importance of integrity, honesty, and competence in engineering practice, discussing how Volkswagen's actions violated these principles. The analysis includes a review of the relevant codes of ethics and suggests ways to prevent similar incidents in the future, emphasizing the significance of ethical conduct in the engineering profession and its impact on public trust, safety, and the environment.

Running head: BUSINESS LAW
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Executive Summary
Engineers are required to maintain a high standard of integrity, morality and ethics, or
else it would adversely affect the lives of different category of people in the society, be it the
common people whom the engineers serve directly or indirectly, the workers working under
the engineers, the financial condition of a company and even the economy of a country.
Therefore, the engineers must adhere to the designated code of conduct and ethics specified
in every modern country. Honesty, fairness, equity and impartiality are the attributes that are
expected from the professional engineers. This paper comprises of the case study on the
violation of professional ethics by Volkswagen when it deceived the U.S. regulatory body for
emission standards by a defeat device software so that they emission standard of their
vehicles are not detected to be higher than the allowable limit. The paper also discusses the
breach in terms of the engineering professional standards of Australian as well as the U. S.
The purpose of the study is to understand the different professional code of conduct for
engineers in different countries, like Australia and U.S. in context to this study. The paper
would give an idea of the breach of professional code of ethics by Volkswagen and the
subsequent issues that cropped up due to this breach. The study also gives a clear picture of
the professional conduct of the engineers pertaining to Australia as well as the U.S.

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Table of Contents
Introduction................................................................................................................................3
The Volkswagen case.............................................................................................................3
Code of Ethics of Engineers in Australia...................................................................................4
American Society of Civil Engineers’ Code of Ethics...............................................................5
Conclusion..................................................................................................................................6
Reference....................................................................................................................................7

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Introduction
Engineers are supposed to exhibit the highest standard of professional integrity and
ethics, otherwise it would have an adverse impact on the lives of different category of people,
be it the common people whom the engineers serve, the workers working under the
engineers, the financial condition of a company and even the economy of a country.
Therefore, the engineers must adhere to the designated code of conduct and ethics specified
in every modern country. Honesty, fairness, equity and impartiality are the attributes that are
expected from the professional engineers. The purpose of the study is to understand the
different professional code of conduct for engineers in different countries, like Australia and
U.S. in context to this study. The paper would give an idea of the breach of professional code
of ethics by Volkswagen and the subsequent issues that cropped up due to this breach. The
study also gives a clear picture of the professional conduct of the engineers pertaining to
Australia as well as the U.S.
The Volkswagen case
To increase global market share, Volkswagen embarked upon an ambitious plan. It
emphasized in designing small diesel autos, which are in contradiction to the United States
standard pertaining to the emission of nitrous oxide. The technology for meeting the US
standard was costly for the company to invest in the mid priced vehicles. The engineers at
Volkswagen created such software which circumvented the US emission test of vehicles,
instead of fixing the standard issues. The software was made to recognise the U.S. regulator
test admission software called Chassis Dynamometer and function like a regular U.S.
standard vehicle immediately [1]. However, in normal conditions, the vehicles functioned
with their small diesel autos emitting a higher amount of nitric oxide, which was 40 times
higher than the allowable level. By such falsification, Volkswagen managed to get U.S.

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approved certificate from the U.S. Environmental Protection Agency as to its new clean
diesel autos, meeting the U.S. emission standards. In 2014 a team of Volkswagen engineers
found out that the small diesel auto engine vehicles are being claimed of high rates of
warranty for they have been spending more time on the ‘emission tight mode’ that gets
activated whenever the vehicle comes to recognise the U.S. regulator’s test emission
program. To handle this issue the Volkswagen engineers announced a software update which
was essential for all car owners to improve their vehicles performance. In reality the
engineers wanted to repair the defect of the vehicles by devising into those vehicle another
way of distinguishing real-world driving and emission testing program so that they do not
spend more time on ‘emission tight mode’ [1].
This fraudulent action of Volkswagen was reported in 2011 when the vehicles were
emitting excessive nitrous oxide than permitted. A report to the California Air Resources
Board resulted to further thorough investigations where Volkswagen keeps on defending its
fraudulent act. Volkswagen claims to fix its emission issues voluntarily in 2015, where it only
fixed the matter to a negligible extent, instead of addressing the true cause behind the
problem. However, in late 2015 the company accepted of its fraudulent act and its use of
defeat device to mislead the US regulators standards of vehicle, thereby settling for a
compensation of $17 billion with the US customers and dealers along with a criminal penalty
of $4.3 billion imposed by the government of US [1].
In this case a clear picture of breach of ethical code of conduct on the part of the
engineers can be witnessed. The case study is therefore analysing in terms of the code of
ethics of the Engineers in Australia along with that of the American Society of Civil
Engineers' Code of Ethics.

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Code of Ethics of Engineers in Australia
The code of ethics of Australia for the engineers list down four code of conduct that
includes:
 Integrity: The engineers are directed to act as per there right conscience and therefore
act impartially. They are meant to be honest and trustworthy to their profession and
should not engage in fraudulent or craft activities leading to criminal conduct. Even
though they are directed to maintain confidentiality pertaining to their profession and
client, yet day are suggested not to indulge in any immoral activity that breaches the
code of conduct of their profession [2].
 Competence: The engineers are meant to develop knowledge and expertise and act
carefully in a diligent manner in their profession. They are advised to seek peer
reviews from their fellow engineers in the same kind of business for mutual
development and growth [2].
 Leadership: They are under the responsibility to uphold the trustworthiness and good
reputation of their profession. They must encourage diversity by giving scope to
newer talents [2].
 Sustainability: The engineers are responsible for promoting sustainability in their
profession along with fostering a good health and safety of the community as well as
the environment at large [2].
For the above discussed case of Volkswagen, they have clearly violated the code of ethics
for the engineers in Australia. They have breached their professional integrity by being
dishonest in their business by creating the software to defraud the US regulatory standards of
vehicle. This leads to the fact that at the engineers failed to practice their profession

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competently as they were unable to find a solution to decrease the nitrous oxide emission and
instead they found it easier to fool the system.
American Society of Civil Engineers’ Code of Ethics
As per the code of ethics of the American Society of Civil engineers the engineers of
Volkswagen had breached Canon 6 of ASCE's code of conduct and ethics. Canon 6 of
ASCE’s code says that the engineers are meant to act in a manner to uphold the integrity,
dignity and onus of the profession and they shall not act for bribery, corruption and fraud [3].
The canon also states that the engineers are not to engage themselves in any unethical or
fraudulent activity e even if it is within the ambit of his profession which involves deceiving
someone or an authority. In this case the Volkswagen engineers not only fooled the U.S.
emission regulation but also deceived so many customers who purchased the vehicles
believing it to be environmental friendly. In addition the engineers submitted several false
reports pertaining to the performance of the vehicle and its emission standard to meet the US
compliance, thereby breaching Canon 3 of the ASCE's code of ethics [3].
Conclusion
Therefore, from the above discussion it can be evaluated that Volkswagen had
breached the professional code of ethics as per both the engineering standards of Australia as
well as the U.S. The company adopted several fraudulent ways to befool the U.S. regulatory
body for emission standards by a defeat device software. It severely breach the integrity and
honesty of the profession, as per the Australian and the U.S. code of professional conduct of
engineers. In this context, the company was made to pay penalty to the government for
violating its code of conduct and for acting dishonestly.

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Reference
[1]"A Moral Lapse Creates a Scandal | ASCE", Asce.org, 2019. [Online]. Available:
https://www.asce.org/question-of-ethics-articles/june-2017/. [Accessed: 05- Apr- 2019]
[2]Eacorp.prod.acquia-sites.com, 2019. [Online]. Available: http://eacorp.prod.acquia-
sites.com/sites/default/files/resource-files/2018-10/EA%20Code%20of%20Ethics
%20Final.pdf. [Accessed: 05- Apr- 2019]
[3]"Code of Ethics | ASCE", Asce.org, 2019. [Online]. Available: https://www.asce.org/code-
of-ethics/. [Accessed: 05- Apr- 2019]