With Porsche joining the list of car manufacturers being investigated over diesel emissions fraud, the exact scale of the problem remains unclear.

Volkswagen, which owns the Audi, VW and Porsche brands, has already admitted systematic cheating of diesel engine tests while Fiat Chrysler, Peugeot-Citroen and Daimler have also come under scrutiny.

Porsche has said it is cooperating with the authorities and that it sought contact with prosecutors before a formal probe was launched.

The subject matter under investigation is the amount of pollution engines pump into the air. But the legal issue at stake is fraud. Did Porsche fail to prevent – or at least identify – fraud in its workplace?

It is accused of false advertising. Its reputation and finances are likely to suffer and a reputation built up over decades is being tarnished. These are the dangers of failing to prevent fraud in the workplace. Such damage goes beyond the workplace. Which is why companies must do everything to prevent it.

Potential

If emission testing fraud has occurred, then it has been committed against:

* Those who have to test, record and monitor emissions.

* The agencies those people work for.

* Consumers, who have been misled by false advertising and given false information when buying a car.

Any car manufacturer that is serious about preventing emissions test cheating (or any workplace fraud) must analyse its working practices carefully and determine how the potential for fraud can be eliminated.

With various manufacturers being investigated over emissions tests, there may have been:

* Complacency across the car industry regarding emissions fraud.

* A “follow the herd’’ instinct; with one company’s escaping detection giving others the incentive to do the same.

* Arrangements between car companies to ensure emissions test fraud went on undetected - which would then raise the issue of illegal cartel behaviour.

But whoever, and however many, were to blame, the potential for it happening has to be removed.

 

Compliance

This can only be done by developing an anti-fraud culture among everyone working for or with a company. Appropriate procedures must be devised and implemented after those in charge have examined closely all aspects of the workplace and identified the potential for wrongdoing.

Comprehensive, contemporaneous records should be kept, duplicated and filed. A whistleblowing policy that ensures all suspicions of wrongdoing will be treated in confidence and investigated must be introduced.

Those in senior positions have to be aware of the risks of cartel behaviour and ensure their company does not collude with others to “fix’’ pricing or other aspects of the industry.

Cartels

In the UK, the Enterprise Act 2002 created the offence of cartel behaviour. This includes price fixing, bid rigging, market sharing arrangements and deliberate restrictions on production or supply of commodities.

Directors and employees involved in such activity can be held personally, criminally liable for such an offence.  The maximum penalty for the offence is five years in prison - and people have been jailed for it.

This should serve as a stiff warning to those in business to seek legal advice at the earliest opportunity, if they have any concerns that they may be breaching the Enterprise Act.

Compliance is necessary to ensure a company remains within the law. Many in business will dismiss compliance as unnecessary, costly and beyond their expertise. It is unlikely that the car manufacturers under scrutiny now believe that compliance is not worth implementing.

And if a company believes it does not have the expertise to create its own compliance measures, there are business crime legal specialists who can devise them after assessing a company’s working methods.