Volkswagen's European base will be the next 'Dieselgate' litigation battleground

The 2015 Volkswagen (VW) diesel emission scandal took almost everybody by surprise. Globally renowned and trusted for the build quality of its cars, VW found itself being outed as a 'fraudster'.

In the first instance, we should congratulate the American engineer who spotted the anomaly. The aptly named John German from Michigan probably had no idea how big an issue he had uncovered.

Amazingly, Mr German had reported his findings to VW one year earlier, but it had failed to rectify the issue. This could be construed as arrogance on behalf of the manufacturer.

To be forewarned that the cat was out of the bag and then failing to react is the mark of either incredible stupidity – or dishonesty.

The Americans fined VW the equivalent of £2.2bn for these unlawful activities (plus they are having to pay compensation to VW customers affected). The total bill is expected to reach in excess of £15bn. Now hot on the heels of the action in the USA, the Brits and the Dutch are looking to stake their claims for compensation too.

The tale Mr German tells is typical of how many frauds are 'outed'. An individual spots an irregularity, takes a deeper more meaningful look, and has that 'eureka' moment when they suddenly realise that there is something seriously wrong. A lot of the biggest fraud investigations have their roots in the tenacity of the individual who brought their findings to the notice of the authorities.

Fraudsters are an insidious breed. History is littered with crooks who steadfastly refused to take their holidays (or go sick), terrified that if they did so that a work colleague would spot what they had been up to. Frauds are uncovered regularly by individuals such as Mr. German.

It is therefore unsurprising that VW is now likely to face the wrath of the British and Dutch drivers who have been lumbered with these cars. The "dieselgate" scandal as it has become known shows no sign of abating in terms of litigation. These issues are prevalent across several nations and jurisdictions, so where will the pursuit of compensation end?

It is a case made for a 'Class Action' approach, so it is hardly surprising that law firms that specialise in these law suits are rallying prospective clients to join them. If I had bought a VW and been sold the 'clean' ticket by the salesman, I would be more than upset when I learned that I had been misled.

The American settlements and VW's offer to buy back the vehicles affected by the deceptive software program have not been reflected on the European side. It is therefore highly likely that VW's European base is going to be the next litigation battleground.

The defensive quote from VW is astonishingly flippant in the face of the potential European courts' onslaught: "All vehicles affected are and have been technically safe and roadworthy. They can be driven on roads without any limitations and can be sold without loss in residual value. Even if we were to hold talks with law firms we would maintain this position."

This claim is contradicted by the UK Government's Transport Secretary, Patrick McLoughlin, who told the House of Commons in late 2015 that VW will have to address the falling resale value of their cars due to the emissions scandal.

I can only imagine the thoughts of the presiding judge when VW wheels out its plea of innocence in the face of a complete corporate disaster. As Confucious reportedly once said: "To know what is right and not to do it is the worst cowardice."

Martin Kenney is managing partner of Martin Kenney & Co. Solicitors, a specialist investigative and asset recovery practice based in the British Virgin Islands. Kenney focuses on multi-jurisdictional fraud and grand corruption cases.