Sub-Committee: Public Protector Report on Toyota Quantum Panel Vans: engagement with RTMC

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Transport

25 November 2020
Chairperson: Mr L Mangcu (ANC)
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Meeting Summary

Report No. 37 of 2018/19 on an investigation into the illegal conversion of goods carrying Toyota Quantum panel vans into passenger carrying minibus taxis to transport members of the public for reward

The Subcommittee was briefed by the Road Traffic Management Corporation on the illegal conversion of panel vans into passenger-carrying minibus taxis. The Road Traffic Management Corporation presented background information on access to the National Traffic Information System (eNaTIS) and ongoing criminal cases against various officials involved with illegally registering vehicles and related fraud and corruption, and provided data on converted vehicles that had been investigated by the Public Protector and more generally.

Members asked for clarity on the precise number of vehicles, including ambulances, that were known to have been converted illegally, enquired into the details of how vehicles were registered onto the eNaTIS system and the circumstances in which vehicle registration particulars could be altered. They noted the significant sum of tax revenue that might have been lost as a result of fraudulent vehicle registrations and sought detail about the information encoded in vehicle identification numbers and the possibility of using these numbers to track down illegally converted vehicles. They asked about the history of the problem and the progress made on criminal cases against people involved in vehicle registration fraud.

The Subcommittee decided to arrange meetings with the Public Protector and the National Regulator of Compulsory Specifications for the following week, and with Toyota and the taxi associations early in the next year.

Meeting report

Road Traffic Management Corporation (RTMC) Briefing

Adv Makhosini Msibi, Chief Executive Officer (CEO), RTMC, began by giving a breakdown of the roughly 11 000 employees who had access to the government’s National Transport Information System (NaTIS) by province and by role. He also noted that registered manufacturers, importers and builders (MIBs) were also able to introduce and update records when vehicles were registered and sold, and the documents required to record a change to a vehicle’s make, model and series. He discussed ongoing criminal cases against various officials involved with illegally registering vehicles and related fraud and corruption in Mpumalanga, the Eastern Cape, Limpopo and the Free State. The RTMC had placed administration marks on 2 168 illegally converted vehicles, which restricted all transactions on the vehicle other than licensing. 42 966 vehicles had been registered on NaTIS as panel vans and converted into various vehicle types. It was not possible however to tell which of these had been converted illegally.

[please see presentation attached for further details]

Discussion

Mr C Hunsinger (DA) asked to clarify whether it was impossible to determine how many vehicles had been converted from panel vans. The Department of Transport had given a number of 2 353, but reports indicated a number above 6 000 taxis as well as 3 000 ambulances. The Department had indicated that the investigation would be limited to the 2 353 vehicles. What was the position of RTMC on the actual number? He asked how access to the eNaTIS system was controlled. Did users have unique access codes, and would it be possible to change the passenger number limit from three, say, to 16? Were these changes checked, or was this a blind spot in the management of the system? How were panel vans and taxis identified on their license discs and how manipulatable were these identifiers? How many taxis and ambulances registered on eNaTIS were illegally converted from panel vans? Had RTMC known anything about illegal conversions before it took over the eNaTIS in 2017?

Mr L McDonald (ANC) asked for clarity on legal conversions by registered manufacturers, importers and builders. He questioned how a panel van could be registered as a single-decker bus, as the table in the presentation seemed to suggest it could. He also estimated that the state could have missed out on R2bn in value-added tax from vehicles that were registered as goods vehicles but used as passenger vehicles. Was it not possible to obtain vehicle identification numbers (VINs) of panel vans directly from manufacturers such as Toyota to help identify converted vehicles? People were dying on the roads and the Committee needed to rein in illegally converted vehicles.

Ms N Nolutshungu (EFF) asked which parts of the eNaTIS database were editable and how the fraudulent registration of vehicles had happened. She questioned the claim that it was not possible to tell which of the 42 966 panel vans were illegally converted, drawing attention to Section 17 of the National Regulator for Compulsory Specifications (NCRS) Act, which granted inspectors the right to inspect any vehicle. Why were these powers not being exercised? Had there been any arrests for illegal van conversions, and if so, had any charges been laid?

Mr K Sithole (IFP) asked when the RTMC had discovered the problem of illegal conversions. How many discs had been issued for illegally converted panel vans? When would the 66 officials in Standerton, whose arrests were pending, be arrested? What procedure would the RTMC follow where officials had resigned before they were investigated? Was the RTMC certain that no information had been lost when it took over the eNaTIS system? Was there a system for tracking illegal vans, and how many had been impounded?

Responses

Mr Kevin Kara-Vala, Executive Manager: Road Traffic Information and Technology, RTMC, explained that in order to convert a vehicle, an MIB had to register with the province as a body builder. Then, it would apply to the NRCS for a model number for that particular conversion. The Public Protector’s report had noted some problems with the tests conducted by the NRCS. For example, they had been static tests which could not have assessed the how the vehicle would behave if it rolled. Therefore it would not be possible to identify the illegally converted vehicles without doing a physical inspection of individual vehicles. The eNaTIS system recorded any change to the description of a vehicle after its initial registration by an MIB. In 2009, when the problem had emerged, vehicle description changes for panel vans had been elevated to the provincial desks. Even at the provincial level, the verification, approval and capturing stages had to be performed by different people. Officials’ accounts were password protected, and passwords had to be changed every 30 days. RTMC was working with the Department of Home Affairs to introduce biometric identification. The eNaTIS equipment had last been updated in 2009, and the procurement of services to perform a system refresh was expected to be complete by the end of 2020/21. He explained that Toyota had a specific chassis range that could be used to convert a panel van to an ambulance, but it was only possible to determine whether a particular conversion was legal or illegal by doing a physical inspection.

Mr Kara-Vala said that it was possible, although unusual, for an MIB to register as a body builder and legally register a converted vehicle for the first time. It was possible that the data in the presentation included some of these legal conversions. The single-decker buses listed in the table were also sometimes referred to as midi-buses and had between 16 and 23 seats. The total number of 42 966 was the number of vehicles converted from panel vans to some other use. Before 2009, the registration system had had weak controls, but as soon as the problem was highlighted, changes had been made. However, the 2 353 vehicles investigated by the Public Protector had not been marked or impounded. The VINs of these vehicles had been passed to RTMC, which had only been able to locate 2 168 on the system. The remainder had been re-registered as part of a programme to regularise illegally converted vans. He was not aware of any arrests that had been made in 2009, but did recall that the Special Investigating Unit (SIU) had prepared a report on the matter. RTMC had not been aware of the practice of converting panel vans until 2009. The eNaTIS system included extensive auditing information on vehicle, personal, licensing and financial records, and all transactions were extensively checked. It was impossible to be 100% sure that no information was lost, but regular and extensive information system audits were done. The 510 vehicles seized in the Eastern Cape were imports that had been registered incorrectly. The RTMC had used VIN pattern matching to detect the fraud. The description of a vehicle could only be changed on the eNaTIS system if the model number was also changed, and this could only be done at provincial level.

Adv Msibi said that it would require collusion among several units to register a vehicle illegally. For example, the illegal registration of 510 vehicles in the Eastern Cape had involved the Department of Home Affairs, the accreditor, the South African Police Service (SAPS) as well as the province. The 66 officials at Standerton were still employed and under surveillance. Because the RTMC did not have the power to arrest suspects and had to involve the Hawks, it would take between six months and two years. Although it was not always possible to recover the full cost of the illegal registrations, RTMC did try and recover what it could from implicated officials’ pension funds. He also noted that ambulances were inherently converted vehicles, and the issue in this case was therefore to distinguish between legally and illegally converted ambulances.

Follow-up questions

Mr McDonald was concerned about the possible long-term risks of illegally converted vehicles. Could all converted vehicles not be flagged and inspected the next time their licences were renewed?

Mr Hunsinger asked when the three-stage registration process at provincial desks had been introduced. He asked whether the RTMC had been instructed by the Department of Transport to re-register the vehicles investigated by the Public Protector, that it had not been able to locate in its database. He asked whether a VIN could be changed, given that it was part of a worldwide manufacturer’s index, and requested clarity on how different vehicle types were encoded by the VIN.

The Chairperson said that the RTMC only seemed to be interested in the problem of illegal conversions in response to the Public Protector’s report, which was limited in its scope. He did not get a sense that it had responded to the report as an indication of a bigger problem, in order to ensure road safety. There seemed to be some inconsistencies among the numbers and he wanted to know whether the eNaTIS system could have been the point through which these illegal vehicles entered the system. The static tests done by the NRCS seemed to be an anomaly. Had the RTMC shared information with the South African Revenue Service (SARS) on the possibility of recovering tax lost as a result of illegal registrations? Were background checks done on employees given access to the eNaTIS system?

Responses

Adv Msibi said it would be possible to flag and inspect all converted vehicles when their licences were renewed. However, the illegal registration involved collusion between several state entities needed to be considered. Further, if a manufacturer such as Toyota was misrepresenting vehicles before their initial registration, the only way to detect this would be to inspect the vehicles at the factory.  He confirmed that the Department had directed the RTMC to re-register the outstanding converted vehicles.

Mr Kara-Vala explained that a VIN could only be changed by SAPS. The first three digits of the code were a worldwide model identifier. For example, a VIN starting with the digits “AHT” indicated a Toyota manufactured in South Africa, whereas a Toyota manufactured in Japan would begin with “JT.” The last five or six digits were a serial number, unique to the vehicle, falling within a specific range according to the model. However, gaps in this range (caused, for instance, when a manufacturer produced left- and right-hand drive versions of the same model for different countries) could be exploited for fraudulent purposes with the collusion of SAPS. The RTMC did share information with SARS. This specific matter had not been raised, but he would add it to the agenda of their next meeting. He admitted that there was a challenge with the NRCS static vehicle tests. A lack of controls had enabled dealerships and users to use the tests as an entry point for illegally converted vehicles. He confirmed that the problem of illegal conversions had been triggered by the identification of 2 353 such vehicles in 2009.

Conclusion

The Chairperson appreciated the information provided by the RTMC but added that there were still some unanswered questions.

Mr McDonald suggested that the Subcommittee have a second meeting with the RTMC to tie up some of outstanding matters, such as the exact number of illegally converted vehicles on the road. He also wondered whether it would be possible to meet with the Public Protector to get her point of view on the issue.

Mr Hunsinger noted that his question about the establishment of the three-stage registration process at provincial desks had not been answered. He observed that new questions came up as new information was provided to the Subcommittee. He expressed disappointment that road safety had not been the first priority, given the large number of illegally converted vehicles on the road, but he appreciated the intention to clamp down on the relationships of collusion behind the problem. There was a difficult balance to achieve. He also stressed that the problem involved the private as well as public sector.

Ms Nolutshungu admitted that she was learning about the critical role of provinces for the first time. She suggested that the RTMC might benefit from comparing eNaTIS registration data with homologation statistics. She supported the idea of engaging Toyota and other stakeholders.

Mr Sithole said that further engagement with the RTMC would be necessary, and the RTMC itself needed to investigate the problem more deeply. He suggested engaging with municipalities in addition to the other stakeholders that had been mentioned. He also asked for written responses from the RTMC to unanswered questions.

The Chairperson said that according to his understanding, the RTMC represented both provinces and municipalities.

The Subcommittee decided to arrange meetings with the Public Protector and the NRCS for the following week, and with Toyota and the taxi associations early in the next year.

The meeting was adjourned.

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