Fall 2017

Monitoring Volkswagen's Compliance Reforms

By Lori Atherton

Larry D. Thompson, ’74
Larry D. Thompson, ’74

Larry D. Thompson was enjoying semi-retirement—his second attempt in six years—when he received an offer he couldn’t refuse. Thompson, ’74, was selected by the U.S. government in April to serve as the independent compliance monitor and auditor for Volkswagen AG following VW’s plea agreement to settle its emissions cheating case.

Thompson had been offered corporate monitorship roles in the past, but none had interested him. What drew him to the VW monitorship, he says, is its complexity, which involves overseeing the auto company’s compliance reforms and ensuring there isn’t a repeat of its scheme to cheat U.S. emissions tests.

“I couldn’t pass it up, and I failed at retirement again,” laughs Thompson, who retired in 2011 as senior vice president for government affairs and general counsel of PepsiCo Inc., rejoined the company as executive vice president in 2012, and retired again in 2014. “This is the only monitorship I’m aware of that involves being both a compliance monitor and an auditor. How a large corporation like VW gets past the crimes it pled guilty to and emerges with a culture of compliance and ethics is going to be fascinating. If I can have some small part in the transformation of this important company, it will be worthwhile.”

During his three-year term, Thompson will oversee a handpicked team of corporate fraud investigators, automotive engineers, compliance counselors, former federal prosecutors, and environmental law experts, including David Uhlmann, the Jeffrey F. Liss Professor from Practice at Michigan Law and director of the Environmental Law and Policy Program. Uhlmann, whose official title is counselor to the monitor, was chief of the environmental crimes section of the Department of Justice at the same time that Thompson served as the DOJ’s deputy attorney general.

One of Thompson’s first undertakings as VW monitor is learning about the company, including how it is organized and how it functions, as well as understanding how the emissions cheating happened. Much of Thompson’s work is based in Germany at VW’s headquarters in Wolfsburg and at Audi’s headquarters in Ingolstadt. Thompson and his team will be required to submit reports to the U.S. government documenting their findings and how they plan to bring VW into compliance.

“At the end of three years, I will have to certify to the court and to DOJ that VW has in place compliance plans, programs, and procedures to protect and prevent violations of U.S. anti-fraud statutes and environmental laws,” says Thompson, who is on hiatus from teaching part time at the University of Georgia School of Law while serving as the VW monitor.

With more than 600,000 employees worldwide, understanding the inner workings of VW is no small feat, nor is it without emotion, Thompson notes. “VW is a company that Germany as a country is proud of. I had a chance to meet with the workers’ council in Wolfsburg, and the workers I spoke to are second- and third-generation VW employees. A couple of them had tears in their eyes because they felt like executives had embarrassed them and let them down, and jeopardized their jobs. It’s full of human drama.”

Thompson’s 43 years in practice and his combination of public and private legal experience make him well qualified for his monitorship role. He started his legal career as an in-house lawyer at Monsanto in the 1970s, then moved to King & Spalding LLP in Atlanta, where he eventually became a partner, co-founded the firm’s special matters and government investigations practice, and handled fraud and white-collar criminal cases. In 1982, at the age of 36, he became a U.S. attorney for the Northern District of Georgia, where he served for four years. From 1995 to 1998, he was the independent counsel investigating the Department of Housing and Urban Development, which led to James Watt, former secretary of the interior under President Reagan, being indicted on 24 felony counts in a HUD grant-rigging scandal. From 2001 to 2003, Thompson served as deputy attorney general in the DOJ under President George W. Bush, which included leading the task force that oversaw the Enron, Worldcom, and Adelphia accounting scandal cases. Following his DOJ stint, Thompson moved in-house at PepsiCo until his quasi-retirement.

Though Thompson entered Michigan Law expecting to become a labor lawyer, a seminar on corporate criminal liability taught by Emeritus Professor Joseph Vining changed the course of his career. “That class awakened me to two things: a fascination with the workings of large corporations, and an interest in criminal law and corporate criminal liability,” he says. “What an amazing and lucky set of career steps I’ve had. My luck began by going to Michigan Law, a great school with a terrific reputation and terrific teachers. I’ve been able to take advantage of all of life’s opportunities presented to me, and I’m happy about that.”

“The Justice Department turned to one of its luminaries in selecting Larry Thompson to be the independent compliance monitor in the aftermath of the VW ‘Dieselgate’ scandal. By choosing Thompson, widely revered in the law enforcement community, the corporate world, and the white-collar defense bar, the Justice Department signaled that it expects a new corporate culture at VW where integrity, ethics, and values will define the company.”

Michigan Law Professor David Uhlmann, who is assisting Thompson in monitoring VW’s corporate compliance