It’s a goldmine for crooks selling luxury cars using forged papers

Imported cars at the port in Mombasa. Some of the vehicles destined for Uganda and diverted to the local market. [Maarufu Mohamed, Standard].

Minting millions of shillings from sale of smuggled cars in Nairobi is now as easy as buying candy on the streets.

All it takes is a communion of crooked car dealers, conniving State agents and cross-border criminal networks with tentacles in prison and voila! a thriving empire is born.

This is how some city wheeler-dealers are by smuggling in imported luxury cars and high-end motorbikes which they secretly register and sell to unsuspecting Kenyans to make huge profits.

The hydra-headed conspirators have tentacles all over East Africa and have penetrated the heart of motor vehicle registration system. The results are a flood of dubious vehicles on Kenyan roads with cloned registration documents.

Following months of investigations, The Standard can now report about the multi-layered racket which extends to South Africa, Namibia, Zambia, Tanzania, Burundi, Uganda and South Sudan.

In this complex trade, some foreigners too have dominated the automotive sector and are reportedly using their dealership as a front for money laundering.

This has had adverse effects on a sector which imports an average of 6,000 units per month or about 72,000 second-hand motor vehicles annually.

The government, through National Transport and Safety Authority (NTSA), says it is aware that its platforms have been infiltrated by crooks and is in the process of weeding them out.

“NTSA has been in the process of reviewing and is currently replatforming (sic) the Transport Integrated Management System following the implementation of data recovery system,” says Dido Guyatu, NTSA’s senior deputy director in charge of communication.

She adds that a multi-agency team had been constituted to undertake licence revalidation for all motor vehicle and motorcycle dealers in the country. 

Kenya Auto Bazaar Association says dealers are facing unhealthy competition from crooks who do not pay taxes and are offering their smuggled cars at discounted prices.

The Standard investigations found that crooked dealers have been using NTSA insiders to register the luxury cars and motorcycles stolen or smuggled from South and East Africa.

Others are destined for Sudan or Uganda but are diverted into Kenya.

One of the kingpins of this racket is a high flying Karen-based trader who specialises in smuggling high-end SUVs from South Africa which are then driven to Kenya via Zambia and Tanzania and at times Burundi.

An insider explained how the Karen dealer has been driving cars from South Africa, disguising himself and his conspirators as tourists in need of self-drive car.

Using bogus IDs, insurance policies and registration documents, the criminals have duped a number of travel companies into hiring out their expensive vehicles which are then driven for up to two days to Burundi.

No records

In Burundi, the cars are given fake plates and then driven to Uganda, ostensibly for a visit, before being smuggled into Kenya using temporarily permits.

The permit (C32 form) is obtained at the border, upon payment of $40 (Sh4,400) and is supposed to be renewed after a month.

The racketeers have an arrangement with their border agents that the car details are not entered into the NTSA systems. 

A fake  vehicle (below) is used.

In effect, there are no records of the car’s entry and this buys the smugglers freedom to drive in Kenya using foreign number plates.

In the event a South African car owner is able to trace the vehicle to Burundi, the search will end in Uganda as there are no traces of it in Kenya.

Tinga Mara, an insider who has once worked for the racketeers, told us that once in Kenya, the car is hidden in a discreet garage while conspirators work out ways to give it a new identity.

According to Mara, there are scouts deployed in all parts of the country who feed the thieves with details of legitimately registered high-end cars.

They supply details of car's make, model, colour and registration numbers to cartels who at times steal the logbooks from NTSA headquarters.

Mara described how his colleagues at times erase the genuine ownership information from the NTSA database and superimpose it with details supplied by the kingpins or their puppets.

This done, the racket then moves to activate their contacts at Kenya’s Kamiti Maximum Security Prison.

The contacts, who are prison officers in the department in charge of making number plates, then make identical number plates for the crooks who can now safely sell their stolen car with cloned number plate and logbook.

The owner of the cloned car registration will be unwittingly driving his ‘legitimate’ car in say Mombasa, unaware that the plates of his Prado or Range Rover identical twins in Nairobi or Nakuru.

On a number of occasions, the Karen dealer has used fake Burundian number plates. Once the vehicles arrive in Kenya, they are hidden in one of his homes in Kiserian. Then he activates his contacts. For each stolen vehicle, he is expected to spend between Sh150,000 and Sh300,000 to secure registration documents from NTSA.

“A few weeks ago, a hacker was contracted to access NTSA database to assist the car smuggler to enter the details of vehicles in the system. The hacker was however arrested,” another source privy to the investigations intimated.

During the raid at the hacker’s base on Ronald Ngala Street, thousands of logbooks stolen from NTSA being used to register bogus vehicles were recovered.

When the suspect was interrogated by Directorate of Criminal Investigation officers, he claimed that his boss, the real hacker, had died two months earlier, bequeathing him his laptop, a crucial tool in their trade.

This gave away the game of the Karen racketeer, whose secret garages were raided and more than eight luxury cars stolen from Botswana and Burundi and were awaiting registration, were recovered.

According to our source, “in the compound of his home in Kiserian, there was a Nissan X-Trail, Audi X4, two Mercedes Benz cars, two Toyota FJ and Four Ford Ranger double cabin pick-up trucks.”

According to other industry players, the crooked dealer wanted to maximise on his profits and declined to cough Sh2.4 million needed by NTSA insiders to register them and instead offered a paltry Sh300,000 to register the whole fleet.

A snitch tipped the police and the entire fleet was confiscated and is now gathering dust at a city police yard.

Another racketeer successfully smuggled in a Volkswagen Touareg, a Land Rover Discovery and a Mercedes Benz he had bought in Sudan at between Sh300,000 and Sh600,000.

He then spent an additional Sh300,000 to regularise each car’s registration status and later sold a unit for at least Sh2 million, making a tidy profit.

Charles Munyori, the Kenya Auto Bazaar Association secretary, explains that it takes about Sh1.2 million to import a Toyota Hilux pick up and a further Sh900,000 to pay duty. When a 10 per cent markup is factored, the least such a car can be sold at is Sh2.3 million.

“However, some crooked dealers only spend Sh1.2 million to purchase and a further Sh300,000 on bribery, meaning its cost is only Sh1.7 million,” he said.

The crisis of number plate cloning, Munyori said, was best illustrated by an incident early this year where a Mombasa resident was shocked  to see a Mercedes in Nairobi bearing identical number plates to this Toyota Prado.

An NTSA insider showed us a list of 200 vehicles which had been smuggled into Kenya without payment of duty and had successfully been registered and sold off to unsuspecting buyers.

The insider indicated that there were at least 4,000 motor vehicles which had been registered without following due process.

Our investigations also showed that some importers have been importing cars in containers which they wrongly declare to customs officials at ports of entry as relief food to avoid paying any taxes.

Other cars are shipped into the country in containers and delivered to warehouses where they are then assigned a KG (Kenya Garage) number plates and driven to garages to await the doctoring of their registration plates and other details.

Military precision

The “capture “of the NTSA data platform is executed with military precision during a certain window between 5pm and 8pm. The reason, sources explain, is because at this time, the insider leaves the Wi-Fi of his official laptop open, giving the racketeers a pathway.

One of the kingpins of this racket operates from a mezzanine floor of a building on Kimathi Street, opposite a known tourist hotel.

They charge Sh150,000 per vehicle. Repeat customers are allowed to pay Sh100,000 deposit so that the racketeers are able to feed the details of a car, regardless of its make, and past ownership history into the NTSA system.

The balance of Sh50,000 is then paid by the applicant to secure the logbook bearing all the required car ownership details.

An award-winning journalist who is also a racing bike enthusiast told The Standard that he spent Sh700,000 to secure a high-end motor bike from Kampala.

“I used an agent to buy the bike in Kampala at Sh300,000. I then spent another Sh400,000 to have it registered in Kenya. For this much, I now own a motor bike whose street value is over Sh2 million,”  he said.

With benefit of hindsight, the journalist wishes had he travelled to Kampala himself, he would have spent less and advised our team to take the same route for a better deal.

This is the same route a gang of seven carjackers recently took when they miraculously escaped the hangman;s noose after they were released from prison following their resentencing.

They trooped to Uganda, bought second-hand Toyota Umpires (vans) at about Sh170,000 each and then used their connections in Kamiti Maximum Security Prison to get registration plates.

“They then started plying a Thika Road route and now each of the seven former convicts has four matatus,” an insider said.

A number of matatu operators have also been upgrading their fleet with vehicles bought in Uganda, smuggled into the country and then fixed with dubious registration numbers.

An importer also disclosed that the automotive sector was being used by shadowy characters to launder money.

“It is very easy to carry Sh200 million in foreign currency out of the country. If one has denominations of $100 notes, the money can easily fit in a suitcase.

"This money is then used to buy cars which are then distributed to various yards in Nairobi and Mombasa. This is how money laundering works,” an importer who declined to be named explained.

According to the importers, very few countries check how much money a visitor is carrying while in Kenya and travelers flying out are not made to declare the money they have.

Once dealers buy their cars, they contract Eastleigh-based agents who import them in consolidated containers to Nairobi, having disguised them as duty-free goods which are cleared.

An automotives expert, Isack Kalua, describes Kenya as a favourite destination for Middle East money launderers who have dominated car sales market for a long time.

He said that “60 per cent of all the cars in local car yards are owned by these Middle East dealers and some of them are involved in money laundering.

The dealers love Kenya because it has no policies or a register on who can deal with cars, meaning one person armed with a laptop can post a picture of a car and induce buyers to make orders even when he has no capacity to supply.

Kenya, he added, is one of the highest importer of cars and 7,000-odd cars pass through its ports of entry per month. Even though some of them are destined for the neighbouring countries, a number are diverted into the local market.

According to African Business Pages, an online magazine, sometimes between 2008/2009, Kenya toppled Chile and Russia from the top, to become the largest importer of Japanese used cars in Africa and the world.

“It is very easy to identify cars that were destined for other countries but are being used locally. The inspection sticker on the top left is supposed be Ms EAA, Quality Inspection Services Japan (QISJ), and Auto Terminal Japan as these are the only companies contracted to inspect Kenya bound cars.

“If your vehicle’s sticker reads JAAI or Jevic, know that that car was destined for Tanzania and Zambia. Many car owners are proudly driving cars whose duty was never paid and importation documents were forged,” Kalua said.

Cars from Tanzania and Uganda are relatively cheaper compared to Kenya because there is no age limit of used cars that can be allowed into the two countries. In Kenya, importation of cars that are older than eight years is strictly prohibited.

Ironically, an estimated 4,000 cars imported for the Ugandan market pass through Kenya and are at times diverted into the local market.

Market insiders indicate that some of the cars meant for the Zambian market also end up in Kenya after being diverted through Dar-es-Salaam.

The motorcycle sector, Kalua adds, has also become Kenya’s lowest hanging fruit as there are 900,000 bikes in the country and estimated 18,000 more are imported every month.

Given that the automotive dealers are not closely vetted, some crooked traders use dubious means to register smuggled cars and bikes, further complicating matters in the sector.