Porsche has joined the list of car manufacturers being investigated over diesel emissions fraud.
Prosecutors in Germany are investigating the German sports car maker and its US subsidiary over suspected fraud regarding diesel emissions results, as well as false advertising.
Volkswagen, which owns the Audi, VW and Porsche brands, has already admitted systematic cheating of diesel engine tests. Porsche joins a list of some of the world’s most famous car makers who are being investigated over emissions; including Fiat Chrysler, Peugeot-Citroen and Daimler.
The German authorities have confirmed that Porsche is being investigated and Porsche has said it is cooperating with them. It also claimed that it proactively sought contact with prosecutors before a formal probe was launched.
Some Porsche models are equipped with diesel engines supplied by Audi; which is itself under investigation by prosecutors in Munich.
Porsche, like VW before it, is being investigated over diesel emissions – the amount of pollution its engines pump into the air. But the legal issue at stake here is fraud.
The allegations that Porsche now faces are that it failed to prevent – or at least to identify – fraud in its workplace. As a result, Porsche may now face a whole raft of problems that, while based on emissions cheating, may have a far wider impact on its business.
It is accused of false advertising. Its reputation is likely to suffer great harm. As a result, its finances are likely to be damaged and a world-famous brand that has been established and promoted over 86 years is likely to be tarnished, possibly beyond repair.
These are the dangers of failing to prevent fraud in the workplace. Its damage can go far beyond where the fraud was committed and involve more than legal issues. Which is why any company has to go all-out to prevent it.
The issue of emission testing fraud is one that can be examined from a number of angles. The fraud has been committed against those who have to test, record and monitor emissions and, the agencies they work for; which will ultimately include a government. It has also been committed against consumers, who have been misled – as the accusations of false advertising against Porsche indicate – and given false information when into buying a car.
At this stage, we do not know whether Porsche will deny or admit the allegations. What we do know is that any car manufacturer that is serious about preventing emissions test cheating – or any other workplace fraud – needs to analyse its working practices carefully and determine how the potential for fraud can be eliminated.
he fact that a number of manufacturers are being investigated over emissions testing may indicate that there was either a complacency regarding compliance in the car industry or even a “follow the herd’’ instinct; where the fact that one company escaped detection encouraged others to try their luck. There may have even been arrangements made between the car companies to ensure emissions test fraud went on undetected; which would then raise the issue of illegal cartel behaviour.
It is not unfeasible that one or more car makers may point to rogue technicians in their ranks and claim they were acting on their own. Such an argument would make an interesting legal argument over whether the test cheating was an issue of corporate liability for the firm to contest or one of individual liability, where one or more members of staff may be charged.
But whoever, and however many, were to blame, the potential for it happening has to be removed.
This can only be done by developing an anti-fraud culture among anyone who works for or with the company. If such people understand that fraud will not be tolerated as it will harm the business, it will be less likely that fraud will be committed: less staff will consider attempting it and the scrupulous majority of workers will be aware of the need to identify and report it.
Such a culture can only be developed and nurtured if appropriate procedures are put in place. Any procedures should only be devised and implemented after those in charge have examined closely all aspects of the workplace and identified the potential for wrongdoing. The culture has to start at the top and work its way through the workplace.
Comprehensive, contemporaneous records should be kept, duplicated and filed away safely, as they may be invaluable should an investigation ever be initiated. A whistleblowing policy that ensures all suspicions of wrongdoing will be treated in confidence and investigated will help foster a need among staff to flag up any potential problems.
Such measures are compliance – the need to make sure a company is doing all it can to remain within the law. Many in business will dismiss compliance as unnecessary, costly and outside of their sphere of expertise. It is unlikely that Porsche now believe that compliance is not needed or too expensive.
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.