Financial mess that could result from NTSA logbook scandal

Thousands of unsuspecting Kenyans and financial institutions could be holding on to pieces of paper thinking they are log books to vehicles they own but which have been transferred to other people or used as collateral for loans without their knowledge.

This is as investigations over last week’s arrest of suspects in a syndicate that has been changing vehicle ownership details continue to expose the rot at the National Transport and Safety Authority (NTSA).

 Although the extent of the forgery scheme could take weeks to be fully revealed, detectives have widened their manhunt to motor vehicle dealers, shylocks, financial institutions and the IT department of NTSA in the hope of finding out who else is part of the syndicate.

Detectives from the Directorate of Criminal Investigations spent the better part of yesterday questioning top officials and staff at the NTSA headquarters in Upper Hill.

 Forensic experts combed the authority’s IT infrastructure in a bid to exterminate the syndicate whose actions are not only generating losses to vehicle owners and financial institutions but also creating a security risk.

It was not immediately clear if NTSA Director General George Njau was questioned. He did not respond to our questions on the latest scam to hit the authority. He also did not attend a press conference that he had called together with the Police Inspector General about the festive season, opting to send a statement instead.

Lose trust

 This is as the Kenya Bankers Association (KBA) expressed concern over the syndicate, warning that lenders could lose trust in acceptance of vehicles as security loans if nothing is done to reverse the trend.

 “If criminals can access the system and forge documents whose authenticity and trust depends on how safe the system is, then banks are left holding pieces of paper,” Mr Habil Olaka, the chief executive of KBA told the Nation.

 “If this continues for a long time, banks will have less confidence on that particular asset and will demand either alternative collateral or more collateral. The negative effect of this is that we will have a situation where the country is over collateralised,” he said.

 NTSA, which was formed in 2012 to register and license vehicles, drivers and driving schools, and formulate policies to promote road safety, moved vehicle registration online in 2017 in a bid to speed up the process while creating integrity.

The portal, which runs on the Transport Integrated Management System (Tims) enables Kenyans to register and transfer motor vehicles without the need of personnel from NTSA whose only role is to issue logbooks once all processes have been completed.

The system has, however, been prone to breakdowns, creating unnecessary delays that can last for weeks, affecting those intending to register or transfer vehicles.

 Investigators say that middlemen who were initially assisting motorists to speed up processes by linking them with NTSA insiders whenever there is a breakdown are now assisting criminals to infiltrate the system.

From producing cloned vehicle number plates, illegally registering new vehicles whose tax has not been paid, rerouting vehicles meant for foreign markets, to the latest scandal, the reliability of the Tims system continues to be in question.

Although only 450 logbooks were recovered at a cyber café in Ngara, Nairobi, by detectives from the DCI over the weekend, indications are the syndicate, which cuts deep within the NTSA, has spread its tentacles far and wide.

“The mastermind of the syndicate working in cahoots with officials at the country’s motor vehicle registration body, also illegally develops affidavits and commissions them, before they’re sent to contacts at NTSA for forced transfer of motor vehicles,” said the DCI.

 “To aid in the expeditious change of motor vehicle engines, the detectives established that the syndicate develops falsified importation documents from a renowned car dealer and ETR receipts, making it one of the most elaborate motor vehicles scams in recent times,” explained the DCI.

 A forced transfer of a vehicle can happen for a number of reasons. Lending institutions can repossess and sell a vehicle if it was used as collateral and the owner has failed to pay the loan.

The courts too can order a vehicle to be transferred in the case of a dispute, while new owners can request NTSA to transfer a vehicle to their name if the previous owner has refused to or cannot be traced. 

 To do this, however, one needs to write a transfer letter to NTSA, provide an original logbook, sworn affidavit, copy of ID and Kenya Revenue Authority (KRA) Pins of the old owner and new one, a release letter, tape lift report among other requirements.

Registration documents

 “Tape lifting is a process through which the DCI verifies the chassis number and the engine number of the vehicle to confirm whether they are the same as the details provided in the registration documents. On completion you will be issued with a tape lift report,” says NTSA on its website.

 How the syndicate was able to fraudulently transfer vehicles despite the existence of all these requirements that are supposed to make the process foolproof, is the question detectives are asking themselves as they try to get to the bottom of the matter.

 That such a huge number of genuine logbooks had been accessed from the NTSA and were in the process of being transferred to new owners before being used to access loans from financial institutions has shown how big the criminal enterprise is.

 The crafty network has been making parallel logbooks that are admissible in lending institutions while altering records in the government motor vehicle registration database and providing alternative number plates for smuggled cars.

“Any financial institution that takes collateral for a loan depends on how safe the system used to verify the authenticity of documents being presented to them is,” said Mr Olaka.

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