- VW scandal and D&O liability
- December 18, 2015
- Law Firm: GRP Rainer LLP - Cologne Office
- Manipulated emissions test data, irregularities in CO2 emissions: The VW scandal raises a number of questions. In particular, questions regarding accountability and management liability (D&O liability).
GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London - www.grprainer.com/en conclude: The bad news surrounding the Volkswagen Group is not dying down. Following the revelations over the manipulation of emissions test data for E 189 diesel engines, the Company has since reported irregularities in its CO2 emissions. According to the Group’s own information, the approx. 800,000 affected vehicles this time include gasoline models.
It is not yet possible to estimate the extent of the damage that will be incurred by VW as a result of the emissions scandal. However, issues pertaining to accountability and who will have to pay for the damage are taking centre stage. The executive and supervisory boards could potentially be liable. They can be called to account and held personally liable even if they have merely been negligent. This highlights the importance for executive bodies ¿ not only in relation to VW ¿ to take appropriate action to protect themselves against damages claims from both inside and outside, and minimise their personal risk.
For this reason, companies typically take out D&O (directors and officers) insurance policies for their managerial personnel. These kick in if the executive bodies have acted negligently. It is important for the scope and benefits associated with the insurance policy to be geared to individual needs. This also applies to the amount of liability cover.
It is equally crucial to have an effective compliance management system if one is to stop criminal offences arising from within the business. The compliance system also needs to be tailored to the specific circumstances of a company as well as capable of preventing criminal structures from emerging within a firm. Functioning compliance management systems are not only essential for large corporations, but also increasingly important for small and medium-sized businesses. In order for the system to be able to fulfil its function, its effectiveness needs to be regularly reviewed.
Companies, executive boards and supervisory boards can turn to lawyers who are competent in the field of company law to take suitable measures to protect them from liability and minimise their personal risk.