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Why Scandal Claimed VW's CEO, While GM And Toyota's Survived

Forbes logo Forbes 24-09-2015 Micheline Maynard, Contributor

Martin Winterkorn didn’t even last a week.

The Volkswagen CEO resigned on Wednesday, only days after the German automaker acknowledged that software on its diesel cars allowed them to evade emissions tests.

Winterkorn said he accepted responsibility for the scandal, which may afflict 11 million cars worldwide, but he wasn’t aware of any personal wrongdoing.

It was a swift and shocking turn of events for an executive whose name has been entwined with some of VW’s boldest steps over the past eight years.

During Winterkorn’s eight year tenure, VW achieved its goal of becoming the world’s biggest carmaker, expanded its sales in the United States (where the diesel issue was first discovered) and announced a wave of new factories from China to Mexico.

VW’s logo above its Wolfsburg, Germany factory. (Photo by Alexander Koerner/Getty Images)© Provided by Forbes VW’s logo above its Wolfsburg, Germany factory. (Photo by Alexander Koerner/Getty Images)

The quick action stands out in the wake of two other regulatory scandals where the CEOs not only survived, but appear to have led their companies out of the weeds.

Six years after Toyota became engulfed in recalls involving unintended acceleration, Akio Toyoda is still in charge at company founded by his grandfather.

Likewise, Mary Barra remains the chief executive at General Motors, steering the company through an ignition defect crisis that thus far has cost GM more than $2 billion in fines and other payouts.

Why are Toyoda and Barra still there when Winterkorn is out?

For one thing, both barely had experience in their CEO jobs when the scandals struck, unlike Winterkorn, who has been at the top far longer.

For another, both had unique characteristics that might have helped them deflect calls to resign. For Toyoda, it was his position as the scion of the founding family. For Barra, it was her gender.

The ouster of a Toyoda at Toyota, or the first woman chief executive at a Detroit automaker would have created a second layer of controversy on top of the kind that VW is experiencing with Winterkorn.

To be sure, neither Toyoda’s family position nor the fact that Barra is female would have protected either of them, if government prosecutors found a direct link from them to their companies’ defects.

Toyoda and Barra have something else in common. They spent virtually their entire careers at their respective companies, climbing through the ranks to their jobs, learning many aspects of the business, and building support networks.

By contrast, Winterkorn was not a VW lifer. He only joined the company in 1993, 15 years into his automotive career, after working at German automotive suppliers. Still, he managed to get to the top and stay there for eight years.

While there is no proof that Winterkorn knew anything about what was happening with VW’s emissions software, some experts believe that the German car maker’s strict top-down management system means Winterkorn would have had access to information about it.

“For something of this magnitude, one would expect that the C.E.O. would know, and if he doesn’t know, then he’s willfully ignorant,”  Jeff Thinnes, a former Daimler executive who consults with European companies on compliance and ethics issues, told The New York Times.

Now, VW will have to prove to investors and consumers that it has a system in place so that key issues can be discovered and addressed. Said Thinnes: “…When it’s risk related, the information needs to get to the right people at the right place at the right time.”

That kind of information channel is something both Toyoda and Barra say they have instituted at their companies. Perhaps Winterkorn also might have been able to stay, had VW offered him that.

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