Something is going on at Kebs over used cars and Kenya is the loser

Imported cars at a freight-clearing station in Mombasa. FILE PHOTO | GIDEON MAUNDU |  NATION MEDIA GROUP

In Summary

• The procurement of vehicle pre-shipment inspection is always shrouded in controversy and allegations of bribery.
• Big monies are at stake. It is why lobbying intensifies whenever an existing contract is about to expire and a new tendering is in the offing.

By JAINDI KISERO
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The government must demand more transparency in the decisions made by, and operations of, the Kenya Bureau of Standards (Kebs).

Clearly, something very strange is happening there right now with regard to the lucrative contract for pre-shipment inspection of cars coming to Kenya.

If you open the website of Kebs, you will find a notice informing you that the contract for one of the contractors, Japanese firm Jevic, has been terminated.

In another breath, the same notice also states that Jevic’s contract will run until January 15, 2015, when it formally expires.

You can imagine the gravity of the confusion this notice has created, especially among parties exporting used cars to Kenya.

Whichever way you look at it, the notice is blatantly unfair to this company.

TILTING PLAYING FIELD

If Kebs believes that it has strong and legal reasons to terminate Jevic’s contract before it expires in January next year, why don’t they just do so instead of tilting the playing field to the disadvantage of one player in such a manifestly blatant manner?

Mark you, pre-shipment inspection of used cars coming to Kenya is very big business.

As a matter of fact, Kenya ranks among the top destinations for used cars in the whole world. Currently, it is estimated that 70,000 used cars are imported every year.

Thus, at the current rate of $140 (Sh12,320) per car at the current exchange rate, the three vehicle pre-shipment inspection companies contracted by Kebs rake in billions of shillings in revenues every year.

SHROUDED IN CONTROVERSY

The procurement of vehicle pre-shipment inspection is always shrouded in controversy and allegations of bribery given the monopoly power granted to Kebs to pick the contractor, and the fact that the contractors are hired with very little external monitoring.

Big monies are at stake. It is why lobbying intensifies whenever an existing contract is about to expire and a new tendering is in the offing.

Pre-shipment inspection contracts are the reason for the high turnover of chief executives at Kebs. It is also why members of its board rise and fall at a frenetic pace.

They are removed from office arbitrarily at the whim of whoever is calling the shots at the Ministry of Industrialisation.

It has almost become the practice that every minister will appoint his preferred CEO at Kebs.

POWER SHIFTS

Although former minister Amason Kingi only served briefly when his colleague Henry Kosgey was forced to step down over allegations of impropriety, he made sure that his weight was felt at Kebs.

The current controversy over the position of Jevic is not without context. It is basically about power shifts. The new kids on the block are just too eager to have a say over procurement of pre-shipment vehicle inspection contracts.

But there are broader public interest issues that ought to compel authorities to demand more transparency in the inspection business.

First, there are allegations that the used-car imports in Africa play sanctuary to money launderers and drug traffickers.

Secondly, it is also alleged that some of the Japan-based pre-shipment vehicle inspection companies doing business in Africa are owned or have strong links and associations with the big and major exporters of used cars on the continent.

INCESITUOUS RELATIONSHIPS

Thirdly, there are allegations that some of the companies contracted by Kebs own companies and subsidiaries that are involved in the clearing and forwarding business.

Pre-shipment inspection companies must be made to function with a high level of transparency.

We also need to do thorough due diligence on the major exporters of used cars. Currently, the business is dominated by entities owned by Pakistanis.

It is too risky to have a situation where exporters have strong links with pre-shipment inspection companies.

The rule against imports of cars older than eight years can easily be circumvented if we allow incestuous relationships between pre-shipment inspection companies and the Pakistanis.

jkisero@ke.nationmedia.com