John Gapper has an article in the FT this morning headed:
Volkswagen's deception is a warning to every company
Suddenly, behaviour that was common practice is judged to be improper and possibly illegal
My immediate reaction was to wonder what other deceptions there are in corporate behavior that need to be addressed? The obvious answer is corporate financial statements, or accounts. As Prof Prem Sikka has long argued, these are just a straightforward work of fiction.
The consolidated accounts of a group of companies do not represent the transactions of any real legal entity: they are a selective view of the transactions of many such entities with all the transactions between them, where much of the risk is now known to lie, hidden from view.
They are prepared for shareholders when shareholders are not the main suppliers of capital to most companies.
They are presumed to be the data needed to make decisions on whether or not to invest in the company but make no real contribution to deciding upon its stewardship.
They are considered unsuitable for tax purposes, even by the standard setters who create them.
They ignore the needs of stakeholders.
Employees are considered to be of no special concern.
To be blunt, these accounts are an exercise in wholesale deception from beginning to end.
It's not just the smoke coming out of the back of a VW Golf that suggests there is more to tell. Corporate reporting is in need of total reform if the deceptions are to be consigned to history.
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An environmental chemist of my acquaintance had something to say about the Volkswagen emissions fraud.
They – them, atmospheric modelling, Local councils, dozens of failed MSc projects, environmental campaigners – have never been able to reconcile observed Nitrogen Oxide and microparticle pollution with the stated emissions from diesel vehicles.
It’s always 10-15 times too high, it never adds up, and they know it’s diesels – the levels fluctuate exactly with diesel vehicle traffic fraction.
If the higher estimates of the Volkswagen fraud are true – if they’re understating on-the-road emissions by a factor of 40 – then the environmental measurements almost add up.
Almost.
It’s likely other manufacturers are lying too; and it is certain that mandatory emissions tests for vehicles are being skipped, cheated, or systematically understated.
And you don’t talk about it if you want an academic career – this kind of thing gets research groups de-funded.
If what you and Richard say is true, then what are we poor plebs, who try to live a green and sustainable life to think?
After many guilt filled years of taking BP’s shilling, and their company cars, I converted my own Astra to LPG, as that was the green fuel of the moment, much vaunted by Beyond Petroleum themselves. My guilt balance tipped a little into the black. When that car finally died, I bought my first brand new car, a Mini, running on diesel, and still going strong after five years.
Now this! On top of my BP pension, my BP shares (tucked away in tax free savings), and the Deepwater Gulf of Mexico disaster, my guilt balance is well in the red.
It is dispiriting to say the least. What incentive for us individuals to recycle our junk mail, buy organic eggs, grow our own beans, when the real culprits are lying through their teeth, and polluting more in one day than I can save in a lifetime?
Ninety-seven percent of society’s material waste is created in “productive consumption” – the physical production of commodity value; “unproductive consumption” – reproduction of human labour-power – the life-process of an average member of the working mass of humanity – is associated with the remaining three percent of society’s waste. Domestic recycling and most of what goes with it is barely scratching the surface. We need a vast transformation in the way we go about living on this planet.
This is a good read, for starters: http://www.amazon.co.uk/Ecological-Rift-Capitalisms-War-Earth/dp/1583672184/ref=asap_bc?ie=UTF8
Sorry about the Amazon link – that’s just for the description. It’s cheaper here:
http://www.abebooks.co.uk/servlet/SearchResults?ds=20&kn=The+Ecological+Rift%3A+Capitalism%27s+War+on+the+Earth&sts=t
Although the conclusions are typically mushy.
Sadly, Abebooks is owned by Amazon
https://en.wikipedia.org/wiki/AbeBooks
On August 1, 2008, AbeBooks announced that it had been acquired by Amazon.com.[1]
TINA -again!
That’s just dandy. You’ve completely made my month.
I’ve just checked my purchase history on ABE and it cuts off in early 2010 – I must have been buying through them since as far back as 2002.
Interestingly to some, at one time ABE would routinely list the booksellers’ business phone number, and often a swift call would establish that the book in question was available without the ABE premium. Now they do not list the number, but it’s not so difficult to track down the seller’s shop number given that the town and business name are supplied.
It’s only a fortnight ago that I bought a book through ABE in preference to Amazon… I feel like I’ve caught fleas.
yes-in order to critique the system that very critique is supplied BY the system:
“There must be some way out of here,” said the joker to the thief,
“There’s too much confusion, I can’t get no relief.
Businessmen, they drink my wine, ploughmen dig my earth,
None of them along the line know what any of it is worth.”
Does’nt this tell you the the “my corner’s-allright-sod yours” philosophy needs to be seen for what it is-utter madness?
Not many would have your candour!
Thinking your last statement through it would appear that academic research is of limited value and students should not be forced to rely on peer-reviewed academic sources.
Well, according to DEFRA, Public Electricity and Heat Production and Combustion in Industry account for the larger quantities. If you add-in that produced by Heavy duty vehicles , passenger cars account for a much smaller amount…
Note the “other transport”…..mainly aircraft….
No doubt some is due to excessive production due to rigging of the emission control systems, but in the UK measuring is not dome by relying on manufacturers data…DEFRA actually measures the degree of pollution….it’s interesting to look at the pollution mapping….of course, you also have to consider that the measuring equipment introduces bias, by its placement. The problem is by no means as clear-cut as would seem by initial figures..and that “interest bias” is also introduced…people using some figures to prove their particular point, while ignoring others..
http://naei.defra.gov.uk/data/map-uk-das?pollutant_id=6
http://naei.defra.gov.uk/overview/pollutants?pollutant_id=6
http://naei.defra.gov.uk/overview/pollutants?view=summary-data&pollutant_id=6
Corporate accounts are only one set of fictions generated to avoid scrutiny, restaint and accountability. I work on the basis that every large company that deals with the public should be treated as a continuing conspiracy against the public. They have the motive, opportunity and resources to suborn politcians and policy-makers and to exploit or manipulate the individual or collective behaviour of consumers to advance their own interests to the detriment of those of consumers and of all citizens. Competition bodies should be empowered and resourced to continuously and sequentially subject all large firms to scrutiny and investigation. Most currently operate on the basis of ex post investigation of alleged wrong-doing. Economic and other regulators tend to impose constraints on an ex ante basis. Neither approach is effective. Ex post investigation arises only when the damage is done and provides no effective deterrent or sufficient recompense. Ex ante regulators are invariably captured.
The requirement for continuous scrutiny is unavoidable. The question should always be: “what are these companies hiding from us that is benefitting them but is detrimental to the public interest?”
The bigger deception is UK, German and French politicians expressing public outrage at VW, but all the while behind the scenes doing their utmost to help VW and the rest the industry disguise just how dirty diesel really is…
http://www.theguardian.com/environment/2015/sep/24/uk-france-and-germany-lobbied-for-flawed-car-emissions-tests-documents-reveal
It is an interesting suggestion that government is all knowing and has unified knowledge
Hope you’re not seriously suggesting Dave ‘Hug a Husky’ Cameron (who by profession was a PR man par excellence) doesn’t know fine well his job is to feign concern, but in reality look the other way?
Let me be honest
I think it possible he did not know
Not about this particular VW fraud of course, but the bigger picture of letting polluters pollute. Yes David Cameron and his cronies very much know.
For evidence look no further than George Monbiot’s revelation that the government tried to hide their own report that nitrogen oxides (NOx) – of which diesel engines are the major source – are killing tens of thousands of people every year…
http://www.theguardian.com/environment/2015/sep/22/volkswagen-air-pollution-uk-poisoning-government-legislation
Looking at this from an environmental and sustainability perspective, what sort of political economy should we be striving for that would negate rapacious companies, like VW, from extracting precious natural capital, polluting the ecosystem and lying to all involved?
I am an economic layperson, but I’ve read around a bit and in doing so I have stumbled across the writings of Herman Daly and Brian Czech, who are advocating a Steady State Economy (SSE), which build on the earlier works of Frederick Soddy and Nicholas Georgescu-Roegen. The gist is that the human economy is a subsystem of the ecosystem, which places hard, physical limits on the quantitative growth of human activity (measured in GDP). Daly and Czech advocate a cessation of quantitative growth, instead focussing on development, durability, managing pollution at the point of extraction of low-entropy resources, managed aggregate populations etc.
It seems to me that companies like VW are rational actors in an irrational system. Standard economics ignore, or degrade, environmental damages as vague ‘externalities’, instead of conceptually viewing them as intrinsic to the standard flow.
This sort of thing is the consequence of an entire system geared up for endless growth…for endless growth’s sake! The various aspects of SSE are too numerous to list here, but I feel that the deep sustainability it describes has to be at the heart of a new political economy and, naturally, taxation plays a part.
I explored these issues in a different way in the theory section of the Courageous State (the bit no one reads)
I’ll purchase a copy & one of JoT this weekend!
What staggers one yet again is a CEO (Winterkorn?) stepping down with the umbrella get-out ” I knew naffin’ Guvnah” clause. Despite the huge remuneration of these people and shareholder approved bonus packages, they never carry any of the can, never. We’ve got the Bob Diamond ” I knew naffin’ Guvnah” sicking in our collective ‘craw’ and now this!
The pressure for more and more wealth syphoning by shareholder power creates moral hazard after moral hazard- perhaps we can all sue VW for extra quantum of air polution we will have to breathe in?
If only the CEO’s had a scintilla of humility rather than simply pissing off into the sunset (and another wealth syphoning sinecure) it would not be so bad.
But we know what the mantra is;
“The market is god,
the market produces moral hazard and individual turpitude,
Moral hazrd and individual turptitude are what the god wants”
As a retired accountant yourself wouldnt these be the same accounting standards and reporting that you used yourself to prepare and present your clients accounts.
They have changed massively since I was an auditor
I most recently bought Paul Mason’s book from Wordery,
which (I think) is a subsidiary/co-venture with Bertrams
which is a subsidiary of Smiths News
which is a subsidiary of Connect Group
which is an actual independent smallcap plc.
(I think Waterstones is a Russian Billionaire)