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Dominos Start to Fall at VW

Of course leaders, like the rest of us, should never lie, nor should they hide the truth when doing so would be unethical – a judgment they must make every day. But sometimes they do lie or unethically conceal the truth, apparently betting they’ll get away with it. It’s a risky bet:

-The “Bridgegate” trial is turning up the heat on New Jersey Governor Chris Christie and former aides. In many scandals, the truth comes out in the same way: Prosecutors assemble evidence against one player, who pleads guilty to charges and agrees to testify for the prosecution. That testimony is then used to implicate higher-ups, who agree to testify, and so on. The star witness in this ridiculous but deadly serious tale is David Wildstein, a former official of the Port Authority of New York and New Jersey who went to high school with Christie. In a trial now playing out in Newark, he’s testifying that the two defendants, a former Port Authority official and Christie’s former deputy chief of staff, knew all about his plan to create an epic multi-day traffic jam in Fort Lee, at the approach to the George Washington Bridge, in order to punish the town’s mayor for not endorsing Christie.

Wildstein has testified that he was Christie’s “bad cop” and described “the one-constituent rule” that “the only person [a Port Authority employee] needed to make happy was Governor Christie.” Christie has not been accused of any wrongdoing in the case so far, but the prosecutor in the current case said, startlingly, that Christie knew about the plan. The two defendants are accused of conspiracy, wire fraud, and other crimes. You can’t help wondering if testimony yet to come may yet implicate Christie – and if so, how that might affect Donald Trump, whose transition committee he heads.

-Yesterday’s abrupt resignation of a high-level Audi executive may be only the first domino to fall after a lower-level Volkswagen engineer pleaded guilty earlier this month in connection with the emission cheating scandal. James Liang submitted the first guilty plea by an individual in the case. No connection between that and the resignation of Audi technical development chief Stefan Knirsch has been revealed, but Audi deputy chairman Berthold Huber made clear that the departure was connected to the scandal: “We have no regard for big names and take action if necessary” to clear up the scandal, he said. “This departure underlines our position.”

High-level VW executives have steadfastly denied any knowledge of the defeat device, but prosecutors in the U.S. have already stated their belief that top executives did know about it. Now we’ll see if Liang’s guilty plea begins the classic cascade of revelations, just as Wildstein’s appears to be doing in New Jersey.

The same process seems to be playing out in Brazil’s mushrooming corruption scandal. Who will be hit next? Maybe Wells Fargo? Some leaders get away with dishonesty, but once prosecutors become interested, it’s often just a matter of time before the ugly truth finds its way into the light.

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What We’re Reading Today

Former Wells Fargo employees sue for losing their job…
…because they wouldn’t break the law. The class-action suit represents any employee that was punished over the past 10 years for not reaching sales quotas because they wouldn’t cheat by opening fake customer accounts. They’re asking for $2.6 billion. It adds another hurdle to CEO John Stumpf‘s response to the scandal, as the former employees label the sales targets “unrealistic.” NPR

Pfizer to remain as one company
Ian Read‘s drug company has been considering splitting the firm into two, in order to reduce complexity. When it agreed to buy Brent Saunders‘s Allergan last year, it appeared Pfizer was heading in that direction. But under new tax inversion rules, the deal fell through, leaving Read with less incentive to break up the company. WSJ

U.S. weighs huge criminal fine for VW 
The Justice Department is weighing a fine that wouldn’t force Volkswagen out of business, as it negotiates payments for criminal activities involved in the emissions scandal. The agency is taking into account the current health of the company, in order to determine the penalties. This is separate from the $16.5 billion Matthias Müller‘s company has agreed to pay in civil payments.  Bloomberg

Satya Nadella talks up AI 
At Microsoft’s annual IT conference, the Microsoft CEO said that the company isn’t developing AI tools to beat games (a dig at IBM and Google). Instead, the company’s goal is to develop tools that will “democratize” artificial intelligence. Nadella explains this means analyzing data and finding insights for people and businesses that have far less time than they used to. But it’s also a push to encourage more businesses to use Microsoft products.  Fortune

Building a Better Leader

The more help companies offered pregnant women…
…the more likely it was the women wanted to leave the company nine months after giving birth. The research suggests women appreciated perks, like leaving early for appointments, but often felt like they were sheltered from tough assignments because of the pregnancy. Harvard Business Review

If you have odd email addresses or weird attempts at uniqueness
…on your resume, then hiring managers will likely turn away. But most importantly, show substance in your past work with numbers for support. Fortune

For young professionals…
…it’s important to focus on your own success, instead of watching what peers are achieving. By focusing on others, you may try to copy their path , but the route is different for everyone. PayScale

At the Presidential Debate

Clinton goads Trump
By most accounts, Hillary Clinton was considered the winner of last night’s debate, if one can win a debate at this point in the process. She did so by taking slight digs at Donald Trump, attacking his decision not to release his tax returns, his position on climate change and even his use of his father’s money to start his business. This led to Trump interrupting her a number of times, and seemed to throw him off balance throughout the night. Washington Post

Ford defends itself against Trump claims
While the two candidates battled on stage, Mark Fields‘s company was launching a defense against Trump on social media for comments he made about the car company’s plans to move production of small cars to Mexico. Trump said that Ford was moving jobs from Michigan to Mexico, but the United Auto Workers union (which has publicly supported Clinton) says Ford isn’t moving jobs out of the state. Ford followed by posting graphics about how many jobs it has created in the past five years, and responded to questions from concerned Tweeters. Fortune

Fact-checking the debate 
Throughout the debate, both candidates said things that were inflated, misleading or wrong. Trump made a number of false claims, like saying he never supported the Iraq War, that his business has filed for bankruptcy four times (it’s six), and that it was the Clinton 2008 campaign pushing the story that President Obama was born in Kenya. For her part, Clinton said she wished the Trans-Pacific Partnership would be a good deal, but when it was initially announced, she called it the “gold standard.” FactCheck.org

Up or Out

Jason Goldberger, Target’s chief digital officer, has left the company.  Fortune

Charles Walgreen III, grandson of the founder of the Walgreen drug chain and former head of the company, died on Monday. He was 80.  Chicago Tribune

Fortune Reads and Videos

Add Disney’s name to the list of companies…
…contemplating placing a bid for Twitter. It joins Salesforce and Google as other possible suitors.  Fortune

Domino’s tests self-driving delivery car
The three-foot tall car can hold 10 pizzas, and deliver off the street, like your front yard. It’s currently being tested in Australia. Fortune

Why has Neiman Marcus sales dropped?
After a fourth straight quarter of comparable sales drops, the company says fashion bloggers are to blame. Fortune

Some iPhone 7 owners are drilling holes…
…for headphone jacks in the phone. It should go without saying, but the jacks won’t work. So, maybe, don’t? Fortune

Quote of the Day

“The biggest victims of this scheme are a class of people that nobody else has talked about…The biggest victims of Wells Fargo’s scam [are] the class of victims that were fired because they did not meet these cross sell quotas by engaging in the fraudulent scam that would line the CEO’s pockets.” — From the lawsuit filed by two employees on behalf of Wells Fargo workers that were punished for not meeting sales quotas, while refusing to cheat by opening accounts without customer knowledge.  NPR

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