Horn at the hearings, and a hint of a terror regime in Wolfsburg

"Klinger doesn't work here anymore."

“Klingler doesn’t work here anymore.”

Yesterday, Volkswagen’s U.S. CEO Michael Horn testified in front of the Energy and Commerce Committee of the U.S. House of representatives. Largely unobserved, there were two pivotal moments in that hearing, one causing cold sweat run down the spines of VW managers, the other one dispatching high fives through the whole worldwide Volkswagen organization.

These hearings contribute very little to the finding of information. They are show trials, theater to bolster the image of those on the committee, and to make the “witnesses” look as bad as possible. Der Spiegel wrote yesterday after the hearing: “Americans usually are pleasant-natured, but you really don’t want to sit in front of a Congress committee, where many interrogations turn into a fight show.”

As far as fight shows go, yesterday’s was relatively tame, partially due to many members of the committee, who didn’t come across as particularly sharp, but as heavily in the pockets of local car dealers. The fighting was benign mostly due to Michael Horn, who looked like a man to feel sorry for. There is no winning in these interrogations, the object is to get through alive, and Horn did it.

To get a reading of the depth of water Horn was in, the trained eye simply had to monitor the lawyers sitting behind the witness. Throughout the hearing, they were unconcerned, and often did emails on their smartphones.

In the early parts of the hearing, Horn claimed that the defeat device was the work of two software engineers that had escaped parental supervision, and that no-one at the top of Volkswagen had any idea. Amazingly, Horn wasn’t immediately tarred and feathered for that. Throughout the Q&A, Horn maintained that “this was not a corporate decision,” that this was something he, and the whole C-suite of Volkswagen did not know, and that it was “a couple of software engineers who put this in for whatever reasons.” Texan Joe Collins reluctantly drawled “I take your word for it.”

"A massive over-up, that continues today.”

“A massive over-up that continues today.”

Nearly two hours into the inquisition, it fell to the engineering mind of a Republican from Upstate New York, Chris Collins, to call Horn out for the unbelievable claim.

“I am an engineer, and I have a way of thinking. I cannot accept VW’s portrayal of this as something by a couple of rogue software engineers. Isn’t intellectual property, and patents work, a very important part of what makes VW VW, constantly looking for breakthrough technology that you can patent? It’s a big part of your company, isn’t it? You pride yourself on that as engineers. So you are having us believe, and I think this is the way an engineer’s mind works, back in 2009 you were trying to figure out a way to have clean diesel, top performance, and your engineers got stumped. The NOx emissions were not even close. Would that be true?”

Horn, who speaks perfect English with only a slight hint of his Hamburg upbringing, did a clever feint that avoided an answer:

“What is stumped?”

Collins thundered back:

“Stumped. Confused. They couldn’t get through. It was an insurmountable roadblock. They couldn’t get performance and emissions control at the same time. They were 40 times over the NOx emissions.”

Clever Horn did the submissive leading the dominant: “It seems to be logical what you say, but I just don’t know.”

Collins continued:

“If I’m working in VW engineering, and I am always looking for intellectual property that I can patent to give me a competitive advantage – and I know this is a problem – and I have to tell you, that problem was going way up the chain. We can’t do it. The NOx standards in the U.S. are not what they need to be, we can’t do it. Well, go work harder. Go find a solution,. People are coming back: We still can’t find a solution. The engineering manager: We can’t find a solution. Then all of a sudden, two software engineers, like they found pixie-dust, come in and say: We found a solution. We got it. We fixed it.

Now you are telling me these two engineers snuck their computer code into the software, and no-one said: “This is breakthrough technology! I think we need to run this up the ladder with our attorneys. We need to patent this! This is intellectual property that will give us a competitive advantage. We can meet the NOx standards and the performance standards, and we had a breakthrough, we went from 40 times the emissions to we met the emissions.” And you are trying – VW is trying to get the Unites States of America to believe these are a couple of rogue engineers? I categorically reject that. Either your entire organization is incompetent when it comes up to trying to come up with intellectual property, and I don’t believe that for a second, or they are complicit, at the highest level, in a massive over-up, that continues today.”

At that point, Collins’ time was up, Horn was saved by the bell, and he did not have to answer. Collins was right, and the alleged two rogue software engineers will haunt Volkswagen for a long time. Or maybe they won’t.

The beautiful moment that put smiles on most faces at Volkswagen came when Rep Michael Burgess of Texas wanted to know whether Horn had pointed out to his superiors that the claim tests credulity.

Horn answered:

“Who is superior to me, the guy is not on board any longer. He’s called Christian Klingler. He resigned due to other reasons.”

Nobody in the committee probably noticed it, but with this answer, Horn gave a coded “ding dong the witch is dead” signal to everybody at VW. Horn also hinted what was at the core of the scandal.

Der Spiegel described a well-known culture of vorauseilender Gehorsam – anticipatory obedience – at VW: “In that system, one isn’t obedient – and worthy of being promoted –  if one simply follows orders. You obey by not having to have explained what the guys on top desire.”  Volkswagen insiders talk of a terror regime in many departments of the company, especially in the sales department of Christian Klingler, who quietly left the company. A sordid internal joke likened Volkswagen to a “North Korea without the labor camps.”

"Simply said, he was a royal asshole."

“Simply said, he was a royal asshole.”

Austrian Klingler had married into the Piech family. In the shadow of Volkswagen’s patriarch, Klingler embarked on a despotic rule that ended the careers of scores of capable Volkswagen managers.

At Volkswagen, they called him “the little man in the big suit,” and that was a mild characterization. A highly placed source at Volkswagen described Klingler as someone who “hated everybody. He had a huge inferiority complex, and wanted to fire anyone who had been longer at Volkswagen than himself. If you were an assistant of a board member, Klingler killed you for knowing too much. If there were changes in the market environment, Klingler blamed and fired you. Simply said, he was a royal asshole. He knew everything better, and that’s why people stopped telling him anything. ”

Klingler embodied a “yes, boss” culture where indeed people did not dare to send a “we are stumped” up the ladder, for fear that the tyrant on top will behead you, or worse, send you to Changchun, China. As unbelievable as it may be, in this culture it is entirely possible that engineers saved their hides and mortgages with a little trickery, and it is entirely possible that their superiors simply did not want to know, at least not in writing.

A few weeks ago, Volkswagen’s works council chief Bernd Osterloh said that “Volkswagen needs a fundamental cultural change.” Indeed it does. Dumping despots like Klingler could be a first step.