Larry Dean Thompson and his team are what you could call a special task force. It is their job to ensure that Volkswagen fulfills the conditions of the settlement concluded with the US Department of Justice in early 2017. Having the monitor on-site underlines the gravity of the situation. Everybody knows that cooperation is essential. The company cannot afford to jeopardise the deal in the USA.
There is nothing terrifying about the amicable, elderly gentleman with a velvety voice. He peers curiously through his round glasses and casually talks about his impressive career. Larry Dean Thompson seems so likeable, he is the kind of man you would like to go for a beer with to chat about the state of the world in general, the USA in particular, and anything else that springs to mind.
But the top-ranking lawyer’s reputation precedes him. He was appointed as Volkswagen’s monitor, some say overseer, by the US Department of Justice (DOJ) in spring 2017. His remit for the next three years is to ensure Volkswagen fulfills the conditions imposed in connection with the criminal plea agreement and consent decrees in the USA.
Thompson is certainly up to the job. Between 2001 and 2003, he was deputy attorney general in Washington – the second-highest position at the DOJ. He uncovered the accounting fraud at the energy company Enron – one of the most spectacular white-collar cases in American history. The result: hefty fines, dishonorably discharged managers and lengthy prison sentences for the executives. Now he is turning his attention to Volkswagen.
Officially, the 72-year-old Republican is actually retired. He has turned down several other invitations to act as a monitor. So why did he say yes this time? Larry Thompson is sitting in a quiet corner of a lounge at the International Motor Show in Frankfurt. He rests his elbows on the bistro table and laughs: “My wife says it’s my ego. But I say: Volkswagen is an icon.” At the front, the Group’s impressive stand is packed with journalists and industry insiders. Thompson says he wasn’t just interested in investigating the compliance side of things: he was also very intrigued by environmental engineering processes. “The complexity fascinated me.”
Thompson’s new role has seen him go from a late university lecturer to Independent Compliance Auditor and Monitor. Among his new colleagues are lawyers, engineers, and environmental experts.
A MORAL CHAMPION
Larry Dean Thompson (born 1945) is a renowned US lawyer. Between 2001 and 2003, he was deputy attorney general in Washington – the second-highest position at the US Department of Justice. As US attorney for the Northern District of Georgia (Atlanta), he also dealt with complex cases such as the Enron scandal. He teaches corporate and business law at the University of Georgia School of Law.
A strong team
Just like Thompson, his deputy Jonny Frank has seen it all. The 63-year-old is also overseeing the remediation work at Deutsche Bank as Compliance and Business Ethics Monitor. The division of labor between the two men is clear: Thompson defines subject areas and teams and holds talks with the most senior overseers and decision makers, such as supervisory board members and executives. Frank makes sure that things keep running: he submits requests, collects documents, and hires specialists to analyze data.
Jonny Frank is the only member of the monitor team with whom Larry Thompson had not previously worked. “Jonny was recommended to me. I was impressed by his knowledge and personality,” says Thompson. The other members of the leadership team have known one another for years: Scott L. Marrah, Deputy Monitor for Anti-Fraud, Ethics, and Compliance, Benjamin F. Wilson, Deputy Monitor for Emissions and Environmental, Michele Edwards, Chief of Staff, and Counsel Michael A. Sullivan, a law firm partner.
“I don’t like being retired.”
Since the end of May, Thompson has been spending about a week at Wolfsburg every month. Travelling there from his home in Atlanta takes twelve hours. He got to know the Group’s key divisions at a “boot camp” and introduced himself to the members of staff at a works meeting in Wolfsburg. However, hardly anyone knows exactely what he and his team do all day just yet.
In early September, the first Americans moved into open-plan offices at the Wolfsburg site. They are based in the fully secured, recently renovated former computer center, “Eingang 80.” It may not be the most appealing workspace – huge gray desks covered with piles of documents, large pictures of cars on the walls, and the occasional potted plant – but it has one advantage: the monitor team is just a few steps away from the executive complex, “BT10.”
Checking, checking, checking.
The team of monitors meticulously goes through the conditions set out in black and white in the official documents that make up the resolutions with the US authorities – the Third Partial Consent Decree, the Third California Partial Consent Decree, and the Plea Agreement (the “Criminal Resoultions”). Among other things,, the monitor team must check, for example, how technical problems are treated by the management, quality is certified, and product safety is ensured. They have to check how emission certifications and audits are conducted. They also have to check whether compliance processes really are thorough. Checking, checking, checking. You could liken it to checking that the Group doesn’t flout its probation conditions.
Thompson is given broad discretion within the scope of Volkswagen’s agreements with the US government. He has already established teams focusing on culture and integrity and even one which is responsible for the newly established Sustainability Council.
Sustainability is one of Thompson’s favorite topics. He published on corporate social responsibility while he was teaching at the University of Georgia School of Law. “Companies that want to succeed today need to serve all their stakeholders. Not just shareholders, but customers, employees, authorities – and yes, the environment, too.” The latter is “a very important stakeholder” to Thompson’s mind.
Talking to people
Anything which represents a reputation and compliance risk is important to Thompson. However, he explains that he only talks to people; he doesn’t interrogate them. “Some members of staff think I’m the long arm of the American law and I can put people in jail,” Thompson says and laughs. “I can’t do that, of course.”
Monitoring is not about investigating past misconduct. Instead, it is about examining sensitive processes at the firm and identifying any weaknesses. With this in mind, it would be “very much a problem” if Volkswagen personnel chose not to cooperate, warns Thompson.
HOW THE MONITOR CAME TO WOLFSBURG
As part of its plea agreement, Volkswagen AG has agreed to plead guilty to three felony counts under US law: conspiracy, obstruction of justice and using false statements to import cars into the US. As part of the resolution – comprised of four settlements including the plea agreement – Volkswagen has agreed to pay penalties and fines totaling $4.3 billion and to a series of measures to further strengthen its compliance and control systems, including the appointment of an independent monitor for a period of three years. The monitor is selected by the DOJ from a shortlist of candidates presented by Volkswagen.In accordance with the Criminal Resolutions, Larry Dean Thompson was appointed as Volkswagen’s compliance monitor in April 2017. Since assuming the role, he has set up 23 specialist teams focusing on issues such as emissions, the environment, and anti-corruption; there are also three teams at the sites in Wolfsburg, Ingolstadt (Audi), and Herndon, USA. In his final report, which will be completed in 2020, Thompson has to confirm that Volkswagen fulfills all the conditions imposed by the Department of Justice. Otherwise, Volkswagen may be subject to additional criminal sanctions.
The monitor’s work schedule for the first year has been in place since mid-August. “It’s an investment. But we expect to have long-term benefits,” says Dr. Thomas Meiers, Chief Coordinator for the monitor. He reports to Hiltrud D. Werner, the board member for Integrity and Legal Affairs. His past experience includes establishing a worldwide compliance management system at MAN Truck & Bus.
Meiers and his hand-picked team of 50+ employees now assist Larry Thompson’s team.
Larry Thompson and his team are in direct contact with the department of Dr. Thomas Meiers, Chief Coordinator for the monitor, in Wolfsburg
Meiers’ people are based in the open-plan office right next to Thompson’s. Responses to the monitor team’s requests always have to comply with tight deadlines – often within 24 hours.
“That means extra work for the people here,” says Meiers, adding that this is tough. But the consequences if the monitor does not write a good report at the end of the three years would be much tougher. He mentions a positive aspect too: “Volkswagen will have a much more robust set-up in the future.”
Meiers goes on to say that the Group has already made a number of changes on its own initiative by introducing a whistle-blower system to uncover inappropriate behavior early on and revising its code of conduct. Meiers sees himself and his team as facilitators between the monitor team and the company.
“In three years’ time, Volkswagen should be a company that is distinguished by both its high performance and its high integrity.”
Meiers studied in the UK and the USA, where he was also admitted to the Bar. He is familiar with Americans’ trademark openness and enthusiasm: “Just because Larry Thompson is amicable, it doesn’t mean he will go easy on the Group.” The tall, slim 46-year-old counts his steps each day using a fitness tracker. “I rack up a good 10,000 every day.” He is active and thinks ahead when it comes to the monitor’s report, too. “I have never known a monitor’s first report to be free from suggestions for improvement: ours won’t be either.” Apart from anything else, Thompson has a reputation to lose.
So how does Larry Thompson view things? “This is probably the last big thing I’ll do in my career,” he says. “If there were to be another serious misconduct like the diesel scandal after our certification, I wouldn’t just be disappointed: I would be ashamed. I will do everything to make sure that doesn’t happen.” This time, Larry Thompson doesn’t smile.