Dark Side of the Moon“There is no dark side of the moon really. Matter of fact it’s all dark.”

If you went to college in the 70s or 80s (or maybe even the 90s) you know what the next album is, Pink Floyd’s Dark Side of the Moon. For in the prog rock world, this is truly the standard bearer for all time to come. Reed Fischer, writing in Rolling Stone, said, “Easily the peak of prog rock’s commercial success – and often cited as trailing only Michael Jackson’s Thriller in total global album sales – Pink Floyd’s lean concept album has soundtracked countless planetarium light shows and just as many critical unpackings.”

From many a late night in the dorm room, inspired by your favorite enhancement, this was the best prog rock album by far. Fischer noted, “From its sync-up with The Wizard of Oz (press play after the lion’s third roar) to the Flaming Lips and friends’ track-for-track covers project to Krusty the Clown’s lost Dark Side of the Moonpie to the endless hawking of the prism-and-rainbow logo, the album has endured as a pop culture touchstone since its release. Sonically, it covers classic rock (“Money”), soul (“The Great Gig in the Sky”), glam symphonia (“Brain Damage”), chiming clocks (“Time”) and analog synthesizers (pretty much all of it). Lyrically, Roger Waters was universal yet personal, peeling back the human condition’s paper-thin skin.” To this day, I would challenge anyone to put on a set of phones and not be blasted to the netherworld when those alarm clocks go off.

This album also has the single best line from any prog rock album and perhaps any rock and roll album period, “There is no dark side of the moon really. Matter of fact it’s all dark”. This iconic line introduces us to our old friend Volkswagen (VW), and its continued foot-in-mouth defense of the world’s biggest emissions-testing fraud scandal ever. VW has consistently denied that top management had any knowledge that some group of rogue engineers had engaged in fraud by installing a defeat device, let alone directed that they do so. Of course, these statements were made by senior management to not only save their collective backsides from personal criminal liability but also to help shield the company from the massive civil liability it will owe everyone from the shareholders, to VW’s dealers to its customers for orchestrating a massive fraud campaign against them.

Senior Management

As reported in the Financial Times (FT) by Patrick McGee and Robert Wright, in a article entitled “VW management back in scandal spotlight”, the then Chief Executive Officer (CEO) Martin Winterkorn had been informed about the “irregularities” in VW emissions-testing as far back May 2104, via a memo. Of course, VW no doubt protecting its former CEO at all costs, noted it was not clear if Winterkorn had actually read the memo sent to him.

Further, Winterkorn was also present at a meeting where, the meeting notes indicate, the “diesel issue” was discussed. VW doubling down on its protection of Winterkorn said, “It is not clear whether [the meeting] participants understood already at this point in time that the change in software violated US environmental regulations.” They quoted one analyst, who declined to be named, that “This is either gross incompetence or extreme arrogance.” There is no dark side of the moon really.

It appears that VW will try to argue to the Department of Justice (DOJ) and Environmental Protection Agency (EPA) that “senior managers understood neither that the defeat devices breached US law nor the consequences would be severe.” The article quoted Carl Tobias, who derived this formulation with the “well-known legal aphorism, “Ignorance of the law is no excuse, right?””

The Board

Another FT piece on VW, in the Lex Column, looked at the company’s response from the perspective of the board of directors. The article stated, “There is a more general notion at work here, though: that VW is less culpable if any wrongdoing took place below upper management levels. It is as actions unknown to the board are like an individual’s involuntary bodily movements. “I slipped and the gun just went off, your honour.” But it is surely wrong. Just because the board is the prefrontal cortex does not mean it is off the hook when the metaphorical hands get into trouble.” There is no dark side of the moon really.

 Whistle-blowers at VW

The darkness found on the far side of the moon in VW’s world does not end with the CEO, senior management or even the board. A New York Times (NYT) article by Jack Ewing, entitled “Whistle-Blower’s Suit accuses Volkswagen of Deleting Data”, said, “A former Volkswagen employee has filed a whistle-blower lawsuit in Michigan, asserting that co-workers illegally deleted electronic data shortly after the United States government accused the carmaker of cheating on emissions tests. The former employee, Daniel Donovan, who according to the lawsuit worked as an information manager in an Auburn Hills, Mich., office overseen by Volkswagen’s in-house lawyer, says he was fired in December because his superiors believed that he was about to report the company to the American authorities for obstruction of justice.” VW responded that the suit was “without merit”.

Note that this whistleblower worked in an office overseen by VW’s in-house counsel. After the uproar against the DOJ over its lack of individual prosecutions in the General Motors (GM) ignition switch scandal, particularly among the in-house counsel involved, this could be quite a serious situation for the company’s legal department. At best these allegations “could be a blow to Volkswagen’s credibility in difficult settlement negotiations with authorities in Washington.”

Of course being a whistleblower, even internally at VW, comes with risks. McGee and Wright’s FT article concluded with the following, “When rumours emerged in 2013 that then VW chairman Ferdinand Piëch could be resigning for health reasons, the chairman infamously responded at the Frankfurt auto show: “First I must be sure who it is, then I will send him to the guillotine.” When the Chairman of the Board communicates that attitude towards whistleblowers, you understand that employees will be very unlikely to come forward with untoward news. There is no dark side of the moon really.

It is not clear how and where VW will stumble next but the smart money says they will continue to do so. The company currently has a March 24 deadline to report to a federal district judge its plan to remediate the 500,000 cars in the US with the defeat device. What do you think the chances are that VW will meet that deadline?

I hope you have enjoyed my visit with some old and treasured friends from the prog rock genre. I had thought today would end my series but on Monday, I will have a post featuring my favorite prog rock song of all-time. Stay tuned.

To listen to a YouTube version of the entire Dark Side of the Moon, click here.

 

This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at tfox@tfoxlaw.com.

© Thomas R. Fox, 2016

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