Prosecuting the Boss

A courtroom in Germany is currently the scene of a rare occurrence in the business world: the trial of a high-level executive for corporate crimes. Martin Winterkorn, the former top executive of Volkswagen, is facing charges of commercial fraud, market manipulation and making false statements.

Arguably, he should be facing even more serious allegations. Winterkorn is being belatedly tried in connection with the vast conspiracy in which Volkswagen executives conspired to deceive regulators and the public about the environmental impact of its diesel cars. By rigging the vehicles so their emissions appeared to be within legal limits when they were actually much higher, VW was responsible for releasing vast amounts of extra pollution into the air. The health effects are incalculable.

Winterkorn’s trial, delayed for health reasons, comes nine years after the emissions scandal erupted. During that time, the company has faced perhaps the most wide-ranging regulatory barrage in business history.

In the United States, VW paid a series of enormous penalties. These included a $14.7 billion settlement with the federal government and the state of California announced in 2016. The deal included $10 billion to be used for buying back vehicles with the illegal defeat devices and $4 billion to mitigate pollution from the cars and invest in green vehicle technology.

The following year, VW paid another $4 billion to settle a case brought by the Federal Trade Commission concerning another group of vehicles. The company pled guilty to three felony counts and paid a criminal penalty of $2.8 billion.

VW also faced regulatory actions and lawsuits around the world. Here are some of the most notable.

In its home country of Germany, VW was fined the equivalent of $1.2 billion in a case brought by government prosecutors and another $900 million in a lawsuit brought by the Federation of German Consumer Organizations.

In a case brought by Environment and Climate Change Canada, VW paid a fine equal to $150 million. The Australian Competition and Consumer Commission fined VW the equivalent of $86 million for deceiving customers about compliance with Australian diesel emissions standards.

India’s National Green Tribunal fined VW 5 billion rupees (US$71 million) for installing the cheating devices. South Korea’s Fair Trade Commission fined VW the equivalent of $31 million for false advertising on vehicle emissions. Among the other countries that penalized VW are Poland ($31 million), Brazil ($13 million), and the Netherlands ($536,000).

As important as these cases have been in highlighting VW’s egregious misconduct and extracting financial penalties, the individual prosecution of Winterkorn could have a greater long-term impact. Even though he is no longer employed by the company (he resigned under pressure in 2015), his trial is a demonstration of how a high-level executive can be held personally accountable for misdeeds under his watch. This is especially true in a case such as Winterkorn’s in which the executive is accused of committing some of those misdeeds himself.

If convicted, Winterkorn, 77, is unlikely to spend time behind bars. But a guilty verdict would send a strong signal to other unscrupulous executives.

Note: the enforcement actions discussed above (and much more) will be included in the forthcoming Violation Tracker Global.

Big Business on the Defensive

Too often, the news is filled with stories of large corporations getting away with all kinds of abuses—mistreating workers, fouling the environment, cheating consumers, undermining our privacy. This week has been different.

On the labor front, there has been more coverage of strikes than we have seen for a long while. This includes a resolved dispute involving film and TV writers, a continuing one involving actors and an escalating one involving autoworkers. These work stoppages are all receiving widespread public support.

The auto strike also brought about the first-ever visit of a sitting U.S. President to a picket line. Occupants of the White House have more typically responded to walkouts by blocking them—as Biden did with railroad workers last year—or with more extreme measures such as Reagan’s firing of the air traffic controllers in 1981.

At the same time, news outlets are giving substantial play to efforts by federal and state governments to curb the power of Big Tech. The Federal Trade Commission, along with 17 state attorneys general, just filed a sweeping complaint against Amazon.com, accusing the e-commerce giant of abusing its market power to the detriment of both consumers and small businesses that rely on its platform to sell their goods.

The FTC complaint arrives as the trial proceeds in a Justice Department lawsuit against Google for monopolizing the online search market. Both cases challenge the core business models of the companies. Even if break-ups of the tech giants are unlikely, adverse court rulings could require them to make fundamental structural changes in the way they operate.

Significant changes, while perhaps not as drastic, could also result from the current labor disputes. It appears that the new contract won by the Writers Guild of America will put limits on the industry’s control of content created with the help of artificial intelligence. United Autoworkers members are seeking to dismantle tiered wage structures and reduce the basic workweek while the industry is making the transition to electric vehicles.

Other fundamental challenges to corporations can be seen in the environmental area. Not long ago, a group of young people in Montana prevailed in their lawsuit arguing that the state’s failure to consider climate change when approving fossil fuel projects was a violation of a provision in the Montana constitution guaranteeing residents the right to a clean and healthy environment. This is just one of numerous efforts to use the courts to address the climate crisis. Large companies are also facing the prospect of new greenhouse gas disclosure requirements—one passed by the California legislature and another pending in the European Union.

Corporations are not giving into these challenges without a fight. They are trying to limit their concessions to unions, aggressively arguing their positions in the court cases, taking steps to sway public opinion and employing legions of lobbyists to promote their point of view to legislators and policymakers.

Yet, for the moment, it is a pleasure to see Big Business on the defensive.

Holding Corporations Accountable for Defective Products

A federal judge in Michigan just shot down a motion by Fiat Chrysler to derail litigation alleging it sold 800,00 vehicles with faulty gearshifts. The company could end up paying many millions in damages. At about the same time, a federal judge in New York gave final approval to a $5.2 million settlement of class action litigation claiming that DevaCurl products caused hair loss and scalp damage.

These are two recent examples of actions in an arena in which corporations are held accountable for causing harm to their customers: product liability lawsuits. These kinds of court cases are the latest category of class-action and multi-district litigation to be added to Violation Tracker.

The database now contains entries covering 120 of the most significant product lawsuits of the past two decades in which corporations paid substantial damages or a monetary settlement to large groups of plaintiffs.  The total paid out by the companies in these cases is more than $54 billion.

Fourteen of the cases involved payouts of $1 billion or more, the largest of which was the $9.6 billion Bayer agreed to pay to resolve tens of thousands of suits alleging that the weedkiller Roundup, produced by its subsidiary Monsanto, causes cancer. Bayer, which produces pharmaceuticals as well as chemicals, was involved in five other cases on the list, bringing its aggregate payout to more than $12 billion, the most for any corporation.

Next in line are Pfizer and Johnson & Johnson, each with payout totals of about $5.5 billion for cases involving harm caused by products ranging from hip implants and diabetes drugs to heartburn medication and talcum powder. These two companies and other pharmaceutical and medical equipment producers account for one-third of the cases on the list and half of the payout total. The giant settlements involving opioid producers and distributors are not included here, since they are treated as matters of illegal marketing rather than defective products—and because those cases are most often brought by state attorneys general rather than as private litigation.

The motor vehicle industry also features prominently, with 32 cases and total payouts of $9 billion. The largest portion of that is linked to Toyota, with $5.3 billion in payouts in cases involving issues such as unintended acceleration, defective airbags and premature corrosion. Volkswagen has actually paid out much more in class action settlements due to its emissions cheating scandal, but Violation Tracker categorizes those as environmental rather than product liability cases.

Among the remaining cases are a $1 billion settlement by the German company Knauf involving drywall that emitted noxious odors and a $500 million settlement by Sears Roebuck of allegations that it sold stoves that had a tendency to tip over.

Yet perhaps the most surprising of the cases were two involving the Brazilian company Taurus, which paid a total of $277 million to resolve allegations that it produced firearms with a defect that caused them to go off when dropped. The irony is that gunmakers are shielded from liability when their weapons are used in criminal activities.

Product liability class action and multi-district cases—like similar litigation involving issues such as toxic chemicals, wage theft and privacy violations—are reminders that the courts are an important complement to the regulatory system in addressing corporate misconduct.

A Boom Decade for Corporate Misconduct

Business journalists are looking back with amazement at the stock market’s track record over the past decade. Yet the 2010s were also a boom period for corporate crime and misconduct.

In Violation Tracker my colleagues and I have documented more than 240,000 cases for that period representing $442 billion in fines and settlements—more than twice the $161 billion total for the previous decade. (The numbers are not adjusted for inflation.)

The cases from the 2010s include 574 with a penalty of $100 million or more, 147 with a penalty of $500 million or more, and 67 with a penalty of $1 billion or more.

The top tier of these mega-cases is dominated by four corporations. BP is linked to the largest single case on the list—the $20.8 billion settlement with the federal government and five states to resolve civil claims stemming from the massive 2010 Deepwater Horizon oil spill in the Gulf of Mexico. BP paid out numerous other mega-penalties and smaller ones to put its total for the decade at nearly $28 billion.

The second biggest single penalty during the decade was Bank of America’s $16.65 billion settlement with the Justice Department in 2014 to resolve claims relating to fraud in the period leading up to the financial crisis, including such behavior on the part of Merrill Lynch and Countrywide Financial, which BofA acquired during that crisis. BofA also had plenty of other penalties during the decade—including two in excess of $10 billion—bringing its total for that period to an eye-popping $62 billion.

The third of the penalty leaders is Volkswagen, which in 2016 reached a $14.7 billion settlement with the federal government and the state of California to resolve allegations relating to systematic cheating on diesel pollution emission testing through the use of defeat devices. VW paid out several other multi-billion penalties related to the cheating and racked up a penalty total of more than $23 billion for the decade.

Rounding out the list of companies with individual penalties in excess of $10 billion is JPMorgan Chase, which in 2013 reached a $13 billion settlement to resolve federal and state claims relating to the sale of toxic mortgage-backed securities by the bank itself and by its acquisitions Bear Stearns and Washington Mutual. JPMorgan also had several other penalties of $1 billion or more, along with smaller ones, that pushed its penalty total for the decade to more than $29 billion.

Other big domestic banks had a substantial share of mega-penalties. These include Citigroup, with a $7 billion toxic securities settlement in 2014 (and a penalty total of $16 billion for the decade) and Wells Fargo, with a similar $5.3 billion settlement in 2012 (and a penalty total of $15 billion stemming from issues such as the creation of bogus accounts to generate illicit fees).

The decade also saw a slew of mega-cases involving foreign banks such as BNP Paribas, Deutsche Bank, Royal Bank of Scotland and Credit Suisse for offense such as violations of economic sanctions and their own toxic securities abuses.

Financial services companies of all kinds dominated the mega-penalty list, accounting for 41 of the 67 billion-dollar cases. Also worthy of mention are the pharmaceutical companies, including settlements by GlaxoSmithKline for $3 billion and Johnson & Johnson for $2.2 billion, both for marketing drugs for purposes not approved as safe by the Food and Drug Administration. That industry will end up paying much more when the pending multistate opioid litigation is resolved.

The list could continue. Suffice it to say that the decade’s major cases made it clear that corporate misconduct perseveres through good times and bad.

The 2019 Corporate Rap Sheet

While the news has lately focused on political high crimes and misdemeanors, 2019 has also seen plenty of corporate crimes and violations. Continuing the pattern of the past few years, diligent prosecutors and career agency officials have pursued their mission to combat business misconduct even as the Trump Administration tries to erode the regulatory system. The following is a selection of significant cases resolved during the year.

Online Privacy Violations: Facebook agreed to pay $5 billion and to modify its corporate governance to resolve a Federal Trade Commission case alleging that the company violated a 2012 FTC order by deceiving users about their ability to control the privacy of their personal information.

Opioid Marketing Abuses: The British company Reckitt Benckiser agreed to pay more than $1.3 billion to resolve criminal and civil allegations that it engaged in an illicit scheme to increase prescriptions for an opioid addiction treatment called Suboxone.

Wildfire Complicity: Pacific Gas & Electric reached a $1 billion settlement with a group of localities in California to resolve a lawsuit concerning the company’s responsibility for damage caused by major wildfires in 2015, 2017 and 2018. PG&E later agreed to a related $1.7 billion settlement with state regulators.

International Economic Sanctions: Britain’s Standard Chartered Bank agreed to pay a total of more than $900 million in settlements with the U.S. Justice Department, the Treasury Department, the Federal Reserve, the New York Department of Financial Services and the Manhattan District Attorney’s Office concerning alleged violations of economic sanctions in its dealing with Iranian entities.

Emissions Cheating: Fiat Chrysler agreed to pay a civil penalty of $305 million and spend around $200 million more on recalls and repairs to resolve allegations that it installed software on more than 100,000 vehicles to facilitate cheating on emissions control testing.

Foreign Bribery: Walmart agreed to pay $137 million to the Justice Department and $144 million to the Securities and Exchange Commission to resolve alleged violations of the Foreign Corrupt Practices Act in Brazil, China, India and Mexico.

False Claims Act Violations: Walgreens agreed to pay the federal government and the states $269 million to resolve allegations that it improperly billed Medicare, Medicaid, and other federal healthcare programs for hundreds of thousands of insulin pens it knowingly dispensed to program beneficiaries who did not need them.

Price-fixing: StarKist Co. was sentenced to pay a criminal fine of $100 million, the statutory maximum, for its role in a conspiracy to fix prices for canned tuna sold in the United States.  StarKist was also sentenced to a 13-month term of probation.

Employment Discrimination: Google’s parent company Alphabet agreed to pay $11 million to settle a class action lawsuit alleging that it engaged in age discrimination in its hiring process.

Investor Protection Violation: State Street Bank and Trust Company agreed to pay over $88 million to the SEC to settle allegations of overcharging mutual funds and other registered investment company clients for expenses related to the firm’s custody of client assets.

Illegal Kickbacks: Mallinckrodt agreed to pay $15 million to resolve claims that Questcor Pharmaceuticals, which it acquired, paid illegal kickbacks to doctors, in the form of lavish dinners and entertainment, to induce them to write prescriptions for the company’s drug H.P. Acthar Gel.

Worker Misclassification: Uber Technologies agreed to pay $20 million to settle a lawsuit alleging that it misclassified drivers as independent contractors to avoid complying with labor protection standards.

Accounting Fraud: KPMG agreed to pay $50 million to the SEC to settle allegations of altering past audit work after receiving stolen information about inspections of the firm that would be conducted by the Public Company Accounting Oversight Board.  The SEC also found that numerous KPMG audit professionals cheated on internal training exams by improperly sharing answers and manipulating test results.

Trade Violations: A subsidiary of Univar Inc. agreed to pay the United States $62 million to settle allegations that it violated customs regulations when it imported saccharin that was manufactured in China and transshipped through Taiwan to evade a 329 percent antidumping duty.

Consumer Protection Violation: As part of the settlement of allegations that it engaged in unfair and deceptive practices in connection with a 2017 data breach, Equifax agreed to provide $425 million in consumer relief and pay a $100 million civil penalty to the Consumer Financial Protection Bureau. It also paid $175 million to the states.

Ocean Dumping: Princess Cruise Lines and its parent Carnival Cruises were ordered to pay a $20 million criminal penalty after admitting to violating the terms of their probation in connection with a previous case relating to illegal ocean dumping of oil-contaminated waste.

Additional details on these cases can be found in Violation Tracker, which now contains 397,000 civil and criminal cases with total penalties of $604 billion.

Note: I have just completed a thorough update of the Dirt Diggers Digest Guide to Strategic Corporate Research. I’ve added dozens of new sources (and fixed many outdated links) in all four of the guide’s parts: Key Sources of Company Information; Exploring A Company’s Essential Relationships; Analyzing A Company’s Accountability Record; and Industry-Specific Sources.

Who Pays the Penalties for Volkswagen’s Crimes?

It’s refreshing to see the book thrown at a corporate criminal, but it would have been even better if federal prosecutors had aimed higher.

Oliver Schmidt, who had once been a mid-level manager at VW’s engineering and environmental office in Michigan, was sentenced to seven years in prison for his role in the company’s long-running scheme to defraud the federal government in diesel emissions testing. The charges against him included conspiracy and violations of the Clean Air Act. He was also fined $400,000.

Schmidt, who was arrested when he foolishly came to the United States for a family vacation, must be pissed off at having to pay such a severe personal price while higher ranking VW officials back in Germany will probably remain unscathed. Appearing at his sentencing hearing in a prison jumpsuit with his wrists shackled, Schmidt admitted culpability and did not point the finger at any company superiors. However, he did not let VW completely off the hook.

In a letter to the judge overseeing his case, Schmidt said he felt “misused” by the company and that he was following VW talking points when he met with a California air pollution official in 2015 and concealed the existence of the software that made the cheating possible.

Schmidt could not have participated in a conspiracy all by himself. Yet the Justice Department does not appear to have tried very hard to land any bigger fish (though at least one person senior to Schmidt is being prosecuted in Germany).

Instead, the DOJ took the typical route of bringing a case against the company as a whole and letting it buy its way out of the entanglement. In 2015 the DOJ, along with the Federal Trade Commission and the State of California, agreed on a civil settlement under which VW had to spend up about $10 billion to compensate customers and $4.7 billion on pollution mitigation.

That was followed by a criminal case in which VW had to pay a $2.8 billion penalty. At least this involved a real criminal plea rather than one of those deferred-prosecution or non-prosecution shams, but it is unclear what consequences VW has faced beyond the payout.

The company is technically on probation and has a compliance monitor, but that will probably not mean much. Even before these cases, the company had already been under federal supervision because of a consent decree stemming from a 2005 case also involving emissions irregularities.

Given the severity of the VW cheating and the fact that it was in effect a repeat offense, the DOJ should have done more to prosecute top executives, and the case against the company itself should have had more than financial consequences.

Whereas strict limitations are placed on the activities of individual felons, VW has been able to go on operating as if the scandal had never happened. A case can be made that the company should have been shut out of the U.S. market, but instead it has been advertising heavily and seeking to regain market share. The main challenge is that it can no longer promote its vehicles under the banner of “clean diesel.” Presumably, VW is working on a new way to deceive the public.

The Other Trump Collusion Scandal

For months the news has been filled with reports of suspicious meetings between Trump associates and Russian officials. Another category of meetings also deserves closer scrutiny: the encounters between Trump himself and top executives of scores of major corporations since Election Day. What do these companies want from the new administration?

During the presidential campaign, Trump often hinted that he would be tough on corporate misconduct — especially the offshoring of jobs — and this won him a significant number of votes. After taking office, however, much of the economic populism has disappeared in favor of a shamelessly pro-corporate approach, especially when it comes to regulation. Big business has put aside whatever misgivings it had about Trump and now seeks favors from him.

There is always a fine line between deregulation and the encouragement of corporate crime and misconduct. We should be concerned about the latter, given the roster of executives who have made pilgrimages to the White House.

Public Citizen has just published a report looking at the track record of the roughly 120 companies whose executives have met publicly with Trump since November 8 and finds that many of them “are far from upstanding corporate citizens.”

Using data from Violation Tracker (which I and my colleagues produce at the Corporate Research Project of Good Jobs First), Public Citizen finds that more than 100 of the visitors were from companies that appear in the database as having paid a federal fine or settlement since the beginning of 2010.

In its tally of these penalties, which includes those associated with companies such as Goldman Sachs and Exxon Mobil whose executives were brought right into the administration, Public Citizen finds that the total is about $90 billion.

At the top of the list are companies from the two sectors that have been at the forefront of the corporate crime wave of recent years: banks and automakers. JPMorgan Chase, with penalties of almost $29 billion, is in first place. Also in the top dozen are Citigroup ($15 billion), Goldman Sachs ($9 billion), HSBC ($4 billion) and BNY Mellon ($741 million). Volkswagen, still embroiled in the emissions cheating scandal, has the second highest penalty total ($19 billion). Two other automakers make the dirty dozen: Toyota ($1.3 billion) and General Motors ($936 million).

The rest of the dirty dozen are companies from another notorious industry: pharmaceuticals. These include Johnson & Johnson ($2.5 billion),  Merck ($957 million), Novartis ($938 million) and Amgen ($786 million).

All these companies have a lot to gain from a relaxation of federal oversight of their operations. While it remains unclear whether the Trump campaign used its meetings with Russian officials to plan election collusion, there is no doubt that the administration has been using its meetings with corporate executives to plan regulatory rollbacks that will have disastrous financial, safety and health consequences.

The Emissions Scandal Widens

Big business would have us believe that it is on the side of the angels when it comes to the Paris climate agreement. A group of large companies just published full-page ads in the New York Times and Wall Street Journal urging (unsuccessfully, it turned out) President Trump to remain in the accord.

Not included in the list of blue chip signatories were the big auto producers, which may reflect the realization among those companies that it is becoming increasingly difficult for them to present themselves as defenders of the environment.

On the contrary, recent developments could cause them to be regarded as among the worst environmental criminals. That’s because evidence is growing that the kind of emissions cheating associated with Volkswagen is more pervasive in the industry.

Recently, the Justice Department, acting on behalf of the Environmental Protection Agency, filed a civil complaint against Fiat Chrysler alleging that the company produced more than 100,000 diesel vehicles with systems designed to evade federal emission standards. As a result, those vehicles end up producing pollutants (especially oxides of nitrogen or NOx) well above the acceptable levels set by EPA. In its announcement of the case, DOJ noted: “NOx pollution contributes to the formation of harmful smog and soot, exposure to which is linked to a number of respiratory- and cardiovascular-related health effects as well as premature death.” This is a polite way of accusing the company of homicide.

Around the same time, a class action lawsuit was filed against General Motors accusing the company of programming some of its heavy-duty pickup trucks to cheat on diesel emissions tests.

The two companies are responding differently. GM is denying the allegations, calling them “baseless” and vowing to defend itself “vigorously.” Fiat Chrysler tried to ward off the federal lawsuit by promising to modify the vehicles. It expressed disappointment at the DOJ filing but is still vowing to work with regulators to resolve the issue. Fiat Chrysler is also maintaining that its systems are different from those used by Volkswagen, which has had to pay out billions in settlements and criminal fines; several of its executives are facing individual criminal charges.

Whether the response involves stonewalling, remediation or splitting hairs, the emergence of these new cases turns the emissions scandal from one involving a single rogue corporation to a pattern of misconduct that may turn out to be standard practice throughout the auto sector.

This in turn raises broader issues about deregulation. The Trump Administration and its Republican allies in Congress try to depict corporations as helpless victims of regulatory overreach in need of relief. What the widening emissions scandal shows is that large companies are often instead flagrantly violating the rules and in doing so are putting public health at risk. Rather than relaxing regulation, policymakers should be intensifying oversight to make it harder for cheating to occur.

The car industry would be a good place to start. Misconduct among automakers dates back decades. It was GM’s resistance to safety improvements that inspired Ralph Nader to launch the modern public interest movement in the 1960’s, and it was Ford’s negligence in the deadly Pinto scandal of the 1970s that gave new meaning to corporate greed and irresponsibility. It’s time for these companies to clean up their act once and for all.

Targeting Those at the Top

It remains to be seen how high the new special counsel Robert Mueller aims his probe of the Trump campaign, but there are reports that another prominent investigation is targeting those at the top. German prosecutors are said to be examining the role of Volkswagen chief executive Matthias Muller and his predecessor Martin Winterkorn in the emissions cheating scheme perpetrated by the automaker. They are also looking at the chairman of Porsche SE, which has a controlling interest in VW.

Mueller and Muller, by the way, have more of a connection than the similarity of their names. Last year, the former FBI director was chosen by a federal judge to serve as the “settlement master” to help resolve hundreds of lawsuits brought against VW in U.S. courts. Mueller has played a similar role regarding suits brought against Japanese airbag maker Takata.

Although Winterkorn was forced to resign after the emissions scandal erupted in 2015, he and Muller — who was VW’s head of product planning while the cheating was taking place — denied any wrongdoing, and the company sought to pin the blame on lower-level managers.

The initial U.S. Justice Department case against VW named no executives at all, though a company engineer later pleaded guilty to fraud charges and in January DOJ indicted six other VW middle managers.

There is no question that many individuals had to be involved in a scheme as widespread as the one at VW. Although it was corrupt, VW was also bureaucratic, so it is to be expected that lower-level managers either sought permission from their superiors for undertaking a risky scheme — or they were carrying out a plot that originated from above.

In fact, the New York Times reports that it has been shown internal company emails and memos suggesting that VW engineers implementing the scheme were operating with the knowledge and consent of top managers.

As the evidence mounts, the issue for German prosecutors may no longer be whether the likes of Muller and Winterkorn were involved but whether they, the prosecutors, are willing to bring charges against those at the apex of the corporate hierarchy.

In the United States, a reluctance to take that step has tainted the prosecution of business crime for more than a decade. At a time when discussion of whether anyone is above the law is the focus of discussion in the government realm, we should not forget that the principle applies in the corporate sector as well.

Corporate Crime and the Trump Administration

With all that’s happening in the chaotic Trump transition, less attention is being paid to the announcement that Volkswagen is pleading guilty to felony charges and paying more than $4 billion in penalties while a half dozen of its executives face individual criminal indictments.

A development of this sort should represent a turning point in the prosecutorial handling of the corporate crime wave that has afflicted the United States for years. Yet because of its timing, it may end up being no more than a parting gesture of an administration that has struggled for eight years to find an effective way of dealing with widespread and persistent misconduct by large companies. And it may be followed by a weakening of enforcement in a new administration led by a president whose attacks on regulation were a hallmark of his electoral campaign.

First, with regard to the Obama Administration: The treatment of Volkswagen is what should have been dished out against the banks that caused the financial meltdown, against BP for its role in the Deepwater Horizon disaster, against Takata for its production of deadly airbags, and against the other corporations involved in major misconduct ranging from large-scale oil spills and contracting fraud to market manipulation and wage theft.

Instead, the Obama Justice Department continued the Bush Administration’s practice of avoiding individual prosecutions and offering many corporations deferred and non-prosecution deals in which they essentially bought their way out of jeopardy, albeit at rising costs. These arrangements, which are catalogued in Violation Tracker, imposed a financial burden but appear to have had a limited deterrent effect.

In a few instances, companies did have to enter guilty pleas, but the impact was softened when, for examples, the large banks that had to take that step in a case involving manipulation of the foreign exchange market later got waivers from SEC rules that bar firms with felony convictions from operating in the securities business.

It remains to be seen how much VW’s guilty plea affects its ability to continue doing business as usual. Yet the bigger question is how corporate criminals will fare in the Trump Administration.

Trump the candidate said little or nothing about VW, Wells Fargo and the other big corporate scandals of the day and instead parroted Republican talking points about the supposedly intrusive nature of regulation. Corporations that have supposedly been put on notice about moving jobs offshore or seeking overly lucrative federal contracts apparently are to have a free hand when it comes to poisoning the environment, maiming their workers or defrauding customers.

Although some have speculated that Jeff Sessions will be tough on corporate crime, a Public Citizen report on his time as Alabama’s attorney general in the 1990s provides evidence strongly to the contrary.

While Sessions took pains during his confirmation testimony to claim that he would not be a “rubber stamp” for the new Administration, he has strong political ties to Trump and worked hard to legitimize some of his more extreme positions during the campaign. Trump is unlikely to pay much heed to the traditional independence of the Justice Department, and Sessions is unlikely to adopt policies that rub Trump the wrong way.

Despite the inclinations of Sessions, the appointment of anti-regulation foes to head many federal agencies will mean that fewer cases will get referred to the Justice Department. And if Trump’s deregulatory legislative agenda gets enacted, the enforcement pipeline will dry up even more.

Corporate misconduct may very well decline during the Trump era because much of that conduct will become perfectly legal.