Japanese firm sued over vehicle inspection fees

Vehicles wait to be driven to bonded warehouses. [Gideon Maundu/Standard]

Kenyans might be paying more to buy imported cars after a firm hired by Kenya Bureau of Standard (Kebs) to inspect the vehicles allegedly increased the cost of the inspection in a move which importers claim is against the contract with the State.

According to a case filed before the High Court, a Japanese company - Quality Inspection Services Inc. Japan Limited (QIS Japan) - has allegedly been overcharging and withholding more fees than laid out in the contract.

The case filed by George Odhiambo on May 26 this year says the high cost will, in turn, be passed to consumers, making used cars out of reach for local car buyers who have no means to buy new vehicles.

The plaintiff says he represents consumers who are affected by the actions of the firm that was hired by Kebs.

“The first respondent (Quality Inspection Services Inc. Japan Limited) has been overcharging exporters and importers and Kenyans and unfairly withholding more fees than that contracted for,” court papers filed by Odhiambo’s lawyer Andrew Ombwayo read.

“The first respondent charges from its website, and still overcharges consumers when the current exchange rates for each subject country are applied against the contracted currency.”

Overcharged

According to the suit, QIS had Sh255 million that was allegedly overcharged in the last financial year from inspecting vehicles from Japan alone.

It says there is a likelihood that importers have lost more than Sh2 billion over a nine-year period.

“The loss is likely to be more considering that a Parliamentary progress report of the special audit report dated July 10, 2019, on procurement of pre-export verification of conformity to standard tender no Kebs/T019/2017-2020 had in page 13 placed the figure of motor vehicles imported into Kenya in the years 20150-19 at 409,070 used vehicles,” Odhiambo says in the court papers.

“Consumers have been overcharged against their economic interest while the second interested party (Kebs), consumers and Kenyans have lost monies overcharged and withheld by the first respondent.”

Kebs hired QIS on April 3, 2018, and the firm has been offering inspection and verification on behalf of the State agency. It also ought to collect agreed fees on behalf of Kebs and remit the same.

According to the case documents, the contract provided that QIS charge $155 (Sh16,585) for each vehicle submitted to it for inspection from Japan for importation to Kenya.

Retain fees

From the amount, QIS was to remit $45 (Sh4,815) to Kebs at agreed intervals and volumes and retain the rest as its fees.

Odhiambo alleges that QIS in the last financial year overcharged importers by $30.66 (Sh3,280) per vehicle.

Odhiambo claims that other inspection service providers hired by Kebs have been charging less than the Japanese company.

Kebs, according to the court papers, hired EAA Company Limited and Auto-Terminal Japan that have allegedly been charging $115 total from which they pay $45 as royalty.

“The fact that the extra charged levies by the first respondent are passed to the consumers violates the consumers’ right to the protection of their economic interest,” Odhiambo claims.