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Wärtsilä efficiency scandal: Transparency or damage control, or both?

Mikhael Lilius, chairman of Wartsila Mikhael Lilius, chairman of Wartsila

When the news broke that Volkswagen had used software to cheat emissions testing procedures, the rest of the car industry stayed quiet on the matter, happy to let the German carmaker take the fall. But as investigations delved deeper it was found to be less a VW-emissions-scandal and more of an entire-automotive-industry-emissions-scandal.

Now, it seems, there are two major marine engine manufacturers, too, embroiled in figure-fudging controversies. But their responses are markedly different.

When MAN Diesel & Turbo engines turned out not be as fuel efficient as it had promised its customers, the company stayed quiet and crossed its fingers.

But when Wärtsilä found evidence of a small number of its own employees fudging efficiency figures, on 2% of its engines, an average of 1%, in a single Italian factory… it immediately issued a press release and called a press teleconference to apologise profusely to slighted customers, running the risk of being tarred with the same brush as its competitors, and even legal action.

Some might regard the move as somewhat histrionic. Indeed the question was asked by one participant if this only affects a couple of hundred engines, with a discrepancy of 1%, why are making such a big deal calling a teleconference and so forth.

However, it may instead prove a crucial damage control exercise ensuring the reputation of the company in the long term. Global shipping, after all is often criticised for its secrecy, its reluctance to share information and, some say, its inability to police itself. Many argue that more transparency is needed. Environmental groups are gunning for shipping, furious at its omission from COP21.

It is said that “every crisis is an opportunity” – in this environment, perhaps it is worth company executives admitting to a touch of small-scale fudging, to demonstrate an honest and transparent response to a systemic failure. In the information age, when the disgruntled everyman has unprecedented power to affect your share price, it pays to be open.

There can be no doubt that the actions of Wärtsilä employees “taking shortcuts” were unacceptable. The reasons behind the fraudulent numbers was said not to lie in financial incentives as might have been expected. Why they were taking those shortcuts was not explained, and as Wärtsilä is reviewing its processes the question of whether enough time or resources was given over to testing is one that should be asked.

While Wärtsilä was certainly proactive in coming forward, which can only be applauded, it has also almost inevitably left questions unanswered in the process of doing so.

Posted 09 March 2016

© Copyright 2019 Seatrade (UBM (UK) Ltd). Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Seatrade.

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