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How Volkswagen fights corruption

Interview with Dr. Kurt Michels, Group Chief Compliance Officer

For the International Anti-Corruption Day, the Volkswagen Group is taking a strong stance against corruption. Under the motto "One Group - One Voice: Say No to Corruption", Compliance Officers from all brands around the globe provide employees with information on the consequences and risks of corruption and on handling conflicts of interest. In this inter-view, Group Chief Compliance Officer Dr. Kurt Michels talks about corruption prevention at Volkswagen.

Dr. Michels, in the latest ranking by Transparency International* on the perceived corruption in various countries, Germany places ninth and scores comparatively well. Russia, Mexico or Brazil - all locations of the Volkswagen Group – are found in the lower places of the ranking. What does this mean for you as Group Chief Compliance Officer?

In almost every country in the world there are very tough laws and penalties for corruption. Yet it remains a pressing problem worldwide with devastating consequences. Corruption destabilizes societies and deprives the affected countries of billions, which are then not available for their development. It also causes poverty, costs the future and can be fatal, for example when corruption causes environmental damages or defects in construction projects. Therefore, avoiding and systematically fighting corruption is a focus of Volkswagen - worldwide.

How exactly does Volkswagen fight corruption?

A central component of our corporate culture is to do business with integrity, to behave in accordance with our Code of Conduct and of course, to prohibit corruption. This is based on a common understanding of values, which we anchored in our group-wide Code of Conduct. In addition, our tailored risk-based and group-wide Compliance and Integrity program helps us to prevent corruption and to ensure behavior in accordance with the rules.

What exactly does that look like?

First, we take a look at the corruption risks that our more than 700 active companies around the world are exposed to. We determine whether the respective company is exposed to a low, medium or high corruption risk. We examine this on the basis of their business models, their cooperation with third parties or public officials and, last but not least, on the basis of the country risk. Depending on the risk, we then use standardized Compliance measures. This also includes: All companies with a high risk category are looked after by independent Compliance Officers on site. They implement the necessary guidelines and processes, train employees, check the integrity of their business partners and utilize our Whistleblower Systems.

Paper is known to be patient. In your opinion, what is the best way to fight corruption?

When it comes to Compliance, many rely primarily on good processes and guidelines, which are extremely important. They provide security and create freedom to act and work with confidence. However, in the fight against corruption, a corporate culture of integrity and transparency is much more important. Everyone is responsible for Compliance: Managers have to act as role models and act consistently according to the values and rules. It is important to create an atmosphere in which nobody looks the other way but everyone bravely speaks up about possible wrongdoings. And: Everyone needs to know about it! This is why we train employees and the management in global training campaigns on the Compliance aspects relevant to them. In case of any questions or doubts we as an independent Compliance Organization will offer practical advice.

There are still business partners who, perhaps in the interests of Volkswagen, want to help one or the other decision with bribery ...

This is an absolute no-go! The prohibition of corruption is clearly stated not only in all contracts but also in our Code of Conduct for our partners in Sales and Procurement. We only work with business partners who act with integrity. Therefore, we select our partners very carefully. Furthermore, we conduct regular checks across the Group according to the same Integrity and Compliance criteria with the help of our IT-based Business Partner Due Diligence Process. In addition, we train our business partners and actively share our Compliance experiences with them. This way we support them in weatherproofing their own Compliance programs. During audits, we check whether the partners adhere to the agreed rules of the game. In the end, the message is: If you don't play clean, we won't do business with you.

But you can never completely avoid corruption in a corporate group like Volkswagen, can you?

With our corporate culture and all of the measures mentioned, we prevent systematic misconduct. But of course you can never completely rule out individual misconduct in a company with over 670,000 employees worldwide and thousands of business partners. In this case, it is important that employees, as well as partners, customers and other third parties, have a point of contact in the company. With our Whistleblower System, they can submit concrete hints of corruption and other serious regulatory violation transparently and anonymously – if so desired. With more than 3,000 reports in the past year, 90 percent of Whistleblowers gave us the opportunity to get in touch with them directly. This shows us that there is trust in us and the system. By the way: My colleagues from the Central Investigation Office assign comparatively few hints to the category “corruption”. That makes me optimistic that we are on the right track with our measures.

* Transparency International publishes the Corruption Perception Index every year.

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