Logbook cartel continues to thrive

Police are investigating the latest incident of a parallel logbook allegedly obtained from the NTSA system which came to the fore after a borrower who had failed to service his loan at Meridian Acceptances Ltd made a new logbook and transferred it to a third party within a month. The financial institution provides urgent loans with motor vehicle logbooks as security.

A vicious cartel suspected of manipulating official records to issue parallel motor vehicle logbooks continues to thrive despite rigorous registration reforms, the Nation can report.

And even though the National Transport and Safety Authority (NTSA) and the Kenya Revenue Authority have in recent months intensified their crackdown on fraudsters who swindle financial institutions with the documents and dodge paying taxes, recent cases indicate the criminals may be colluding with rogue government officials to cheat the system.

The borrower took a loan of Sh1.1 million in September 2015 from Meridian Acceptances using a blue Range Rover Sport as security. The vehicle’s logbook (serial number L138198V) was jointly registered with the lender a month later. After the borrower failed to service the loan, the vehicle’s tracking system is said to have been mysteriously removed and a new logbook (serial number L484869M) allegedly processed in September without the lender’s knowledge.

The Range Rover, which had by then been sold to a new owner, was temporarily held at Nairobi’s Kilimani Police Station as investigations continued following complaints from the financial institution. However, police released it to the new owner after NTSA confirmed the logbook had been validly obtained from its system. Curiously, official records show the suspect transferred the vehicle to himself before selling it off but no physical records of the transfer are available, raising more questions.

TWO LOGBOOKS

Last month, NTSA wrote to the police recalling the two logbooks — the one jointly registered between the borrower and Meridian Acceptances and the new one suspected to have been obtained by manipulating the system.

“The above logbooks were verified by me on 28th September, 2016 and a report given vide letter reference NTSA/VER/MV/04. Kindly request the investigating officer to avail the original logbooks to our office for clarification and further details,” read the letter addressed to the criminal investigations officer at Kilimani.

The new owner then obtained a court order seeking the release of the car from the police station on October 13. Neither the lender nor NTSA was enjoined in the case that saw the vehicle released “unconditionally”.

The Nation recently revealed another case of an Audi Q7 car registration which shared the same number plate with two others — a Subaru Outback and a lorry — all under 60 days in the database.

The NTSA director for registration and licensing Jacqueline Githinji said the removal of physical paperwork in the transfer of motor vehicle ownership will eliminate such possibilities in future. She said the authority has since given financial insitutions an online system to verify the logbook ownership records and most motor vehicle registration processes have gone online.

“Hopefully, by December our transactions will be fully online. We strive day and night to safeguard assets and we have eliminated most of the physical processes to reduce chances of manipulation. I think those promising to lend within 24 hours need to be very careful while giving that guarantee,” Ms Githinji said.

DOCUMENTS’ INTEGRITY

Meridian Acceptances managing director James Ndwiga said the cartel is a big setback for asset lenders who rely on the integrity of documents such as logbooks to disburse loans.

“It is worrying that nothing seems to have changed in the system. With an IT system, one should definitely tell who made the changes and who should be held responsible for this scary turn of events. Why would a lender be interested in holding a fake logbook and why did it turn so only when the loan was defaulted?” asked Mr Ndwiga.

In the meantime, KRA officials believe that apart from the 121 vehicles recently deregistered for having dubious registration and dodging taxes, there are 400 more suspected to have entered the country through a similar scheme.

Several top of the range vehicles were also recently impounded by the police on suspicion that they were registered through this cartel. Financial institutions have been hit by a similar cartel before, with some vehicles in the KRA blacklist said to be jointly owned by commercial banks.

KRA Deputy Commissioner in charge of Investigations and Enforcement Mburu Githii told the Nation that those whose cars were impounded are being asked to trace their sellers since the syndicate use stolen identity documents, making it difficult to track them in the import system.

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