The emissions crisis highlights serious corporate governance problems at Volkswagen, says a new report by Moody’s.
While the ongoing management reshuffle is positive, the high turnover creates risks says the international business credit-rating agency.
Yasmina Serghini-Douvin, vice president and senior credit officer at Moody’s said, “VW’s emissions crisis has brought to light serious corporate governance issues within the company that we view as a credit negative.
“These deficiencies include ineffective internal controls to uncover improper activity and poor risk management by VW’s management and supervisory boards. The emission crisis might cause lasting damage to VW’s once-solid reputation with adverse effects on its future earnings and cash flows.
“The management shake-up will empower VW’s brands and improve regional coordination across the organisation. These changes should also help address the company’s organisational complexity, which we have viewed as a long-standing credit negative. However, a turnover of this magnitude creates risks, and additional changes following the conclusion of an internal investigation may put added stress on the quality and depth of the senior management team.”