The taxman has uncovered yet another vehicle number plates racket at the Mombasa port in which hundreds of cars have been released without the mandatory National Transport and Safety Authority (NTSA) registration.
The Kenya Revenue Authority (KRA) has, in correspondence seen by the Business Daily, warned that the unregistered cars pose a security threat as seen in the recent terrorist attack at 14 Riverside Drive in Nairobi, where a double-registered car was used to ferry terrorists to the business complex.
Unregistered vehicles also deny the taxman hundreds of millions of shillings in revenue when they are irregularly diverted into the market without paying taxes.
Vehicles imported into the country should automatically be allocated number plates and their details captured by NTSA before they leave the port or container freight stations (CFSs).The taxman, however, found that its employees at CFSs and the Port of Mombasa have been allowing hundreds of vehicles to be released before being registered.
It was not clear under what circumstances the vehicles were released. “It has come to our attention that the procedure for release of imported motor vehicles has not been implemented by release officers at the port and the CFSs,” Joseph Tonui, an investigations and enforcement manager at KRA, said in a letter to the agency’s port officials on January 25, about ten days after the dusitD2 Hotel attack.
“Specifically, officers at the release gates have been allowing removal of private motor vehicles prior to registration by NTSA.”
In a separate letter on the same day, the taxman asked NTSA to stop Al-Husnain Motors from making any new registrations, accusing the car dealer of having 376 vehicles removed from CFSs before they were registered.
“It has come to our attention that the above mentioned car dealer (Al-Husnain Motors) has been flouting release procedures at the CFSs by procuring release of private motor vehicles prior to registration.”
Some traders told the Business Daily that some dealers clear their cars from the port without registration to take advantage of high demand for the latest number plates in the second-hand vehicles market.
Cars with the latest number plates have the highest appeal and generally command higher prices than older registrations. A dealer can therefore keep unregistered cars for months and register them only when a sale has been confirmed, effectively pocketing the "number plate premium".
Such registration, months after the import date, is irregular and has put the NTSA and KRA under the spotlight.
“Please note that the possession and use of unregistered motor vehicles have recently been cited as a threat to public safety and the matter has drawn growing concerns from various security agencies,” Mr Tonui wrote in the letter to KRA’s port managers.
Unregistered vehicles pose a threat to national security since they can be used without revealing the identity of the owners. The Anti-Terror Police Unit (ATPU) last month raided NTSA’s offices and arrested scores of the agency’s employees, including senior managers working in the licensing, information technology, inspection and the registration of motor vehicles departments, as part of ongoing investigations into illegal registration of vehicles.
The government subsequently suspended services at NTSA to weed out fake number plates in the wake of the dusitD2 attack, claimed by Somalia-based terrorist group Al-Shabaab. Twenty one people were killed in the attack.
Car traders and buyers have recorded heavy losses from the move to suspend new registrations.
NTSA has automated its vehicle registration and ownership transfer processes.
However, scores of vehicles have been found to share the same number plate, with instances of a genuine registration altered to match the details of another car.
This indicates that the NTSA system has been compromised. The agency’s insiders are also suspected of working in concert with criminals to enable the illegal registrations, which aid in concealing the identity of criminals such as robbers and terrorists. The fake number plates saga has also been linked to tax-evasion schemes where vehicles are declared to be in transit to neighbouring markets such as Uganda and South Sudan but end up being sold in Kenya.
Sources say the cars with Uganda or South Sudan registration are eventually given local number plates as part of the abuse of the NTSA system, effectively denying the government revenue.
The fake physical number plates are made in Nairobi and other major towns. Cases of multiple illegal registrations that have come to light demonstrate that the criminals usually attach fake number plates to cars that match the genuinely-registered vehicle as close as possible.
Two cars sharing the same registration details, for instance, would normally be of the same make, model, colour and body type.