Ghost centers and shell companies exposed in multi-billion shilling car inspection fraud case

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The process used to award contracts for inspecting vehicles before they are shipped to Kenya is now facing renewed attention after several people, including Japanese businessmen and Kenyan nationals, were charged in court over alleged procurement offences linked to the Kenya Bureau of Standards (KEBS).

The accused persons, who are connected to two Japanese vehicle inspection companies, have been charged with 40 counts related to procurement fraud at the Milimani Law Courts.

The charges are linked to bids submitted for KEBS pre-export vehicle inspection tenders between 2014 and 2022.

According to prosecutors, the suspects are accused of using forged documents and other fraudulent methods to secure contracts worth billions of shillings.

Investigators claim the alleged irregularities involved forged academic certificates, the listing of inspection centres that did not exist, failure to disclose corporate ownership details, the use of a shell company, and legal representation by an advocate who allegedly did not have a valid practising licence.

The case has drawn attention because vehicle inspection plays an important role in Kenya’s import system.

Every used vehicle destined for the country must undergo inspection before shipment.

The process is designed to ensure imported vehicles meet Kenya’s standards and are safe for use on local roads.During the inspection process, officials verify the vehicle’s chassis number, confirm that it meets the age limit requirements, and ensure it is a right-hand-drive vehicle.

Inspectors also assess important safety components such as brakes, tyres, steering systems, lights and the overall condition of the vehicle.

Vehicles that meet the required standards are issued with a Certificate of Roadworthiness, which is necessary before they can be shipped to Kenya.

The programme was introduced in 2005 as part of efforts to keep unsafe and substandard vehicles out of the Kenyan market.

Since then, KEBS has relied on private inspection companies operating in countries where vehicles are exported from to carry out these checks.

The current court case follows concerns that have been raised over the procurement process for several years.

In 2019, a special audit by the Auditor-General questioned claims made by one of the Japanese companies regarding the number of inspection centres it operated in Japan and the United Kingdom.

Investigators reportedly verified only eight lease agreements despite claims that the company had 17 centres in Japan and three in the UK.

Although the companies facing charges no longer hold the inspection contract, attention has also turned to the current inspection provider, Quality Inspection Service Japan (QISJ). In 2021, a Kenyan citizen filed a petition with the Public Procurement Regulatory Authority, seeking to have the company barred from future government tenders over alleged conflict of interest concerns.

The petitioner argued that the company had not disclosed an alleged interest in a used vehicle export business, raising questions about its independence in carrying out inspections.

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