The New Zealand Transport Agency (NZTA) is signalling it will take a tough line against a major business that both imports used cars and tests if they are safe.
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But the inspection side of the business said there was no conflict of interest because its systems and inspectors had total integrity.
VINZ, one of the country's big three inspection companies, has gone on the front foot after a week of reports questioning if it really should be testing used vehicles that its sister company, Nichibo, imported.
"Our inspectors have an obligation and a code of conduct that they sign to make sure that if they in any way are directed to do something they shouldn't be doing, they have to report that not only to us, but directly to the Transport Agency," VINZ chief executive Gordon Shaw told RNZ.
"My inspectors take their job extremely seriously. They know they have a part to play in keeping New Zealanders safe on the road."
At the corporate level, the firewall was total between VINZ, Nichibo and a third vehicle testing company active here, JEVIC, despite them all being owned by the same Japanese holding company, Optimus Group, Mr Shaw said.
NZTA was willing to accept that but this last month its chief executive Fergus Gammie has changed tack on Optimus.
"Hitherto, we had tried to manage that conflict," Mr Gammie said.
"The rule does allow the management of conflicts but we've determined that actually this is not acceptable and we need to address it."
Mr Shaw conceded the NZTA's approach so far was fuel for public scepticism about his Japanese buying-importing-and-testing group.
But he insisted there was only a perceived conflict of interest, not a real one.
"We have direct operational separation. We have no common directorships across those companies."
VINZ later came back to RNZ and said that was incorrect and what, in fact, was correct was that "no Directors of any of the trading companies sit on the boards of the inspections companies".
He pointed to VINZ recently buying brand new Korean Kias as fleet cars, and not Nichibo imports.
VINZ and JEVIC have, however, been formally warned after being found to have breached the rules by not notifying authorities soon enough about their shared ownership, and they could still be in trouble over what they told the Companies Office.
"We didn't withhold information for a year," said Mr Shaw. "We were in ongoing discussions with the [NZTA] under the rules that we operate under."
VINZ had asked the NZTA to apply extra scrutiny in its regular audits of the company's safety tests of Nichibo imports, he said.
It had even invited the agency to do a special overall audit, and when the agency lacked resources to do that, called in consultants Deloitte, which gave VINZ a clean bill of health.
Deloitte did tell VINZ to sharpen up procedures to support its conflict of interest policies.
The company had also added more CCTV cameras at its site to collect evidence in case of complaints.
The Deloitte report - released to RNZ but mostly blanked out for commercial reasons - did point out there were risks of corruption in vehicle inspection markets.
Mr Shaw said there was no such corruption flying under the NZTA's radar.
"I mean, how long is a piece of string? I can't talk on behalf of the whole industry but when it comes to management of those risks we are very focused on ensuring that there isn't any criminal activity as part of the inspection process."
