Insurers established a national database to stop rebirthing of stolen vehicles, but thieves have started exporting the bodies. Alan Kennedy investigates.
Australia's insurance industry has moved to rein in the illegal $1 billion a year car rebirthing industry. A computer at Queensland's Motor Registry Department began talking to motor registries around the country so that the story of every Australian vehicle, from its day of manufacture and including its list of owners, is available to authorities needing to trace the background of a particular car.
But the industry is wondering whether six years of hard work and duckshoving between the state governments has been worth the effort. Another hole has opened up in the defences and is already being used by car thieves.
Stolen cars are being shipped overseas in increasing numbers because there is no strict checking of who owns material being exported. While Australian Customs is vigilant on what enters the country, it is not as diligent about things going out.
Ray Carroll is the executive director of the National Motor Vehicle Theft Reduction Council. It was recently established to co-ordinate legislation state by state after governments, insurers and other vested interests finally agreed to feed information about "written-off" cars into a central data bank. Carroll says his group aims next to close the export trade.
He says a recent police operation in Sydney which discovered a large number of allegedly stolen cars being shipped to the Middle East has led them to believe the export business may be bigger than they first thought.
Carroll says registration procedures probably were not as rigid overseas and "in those countries a few hundred dollars would be seen as a considerable incentive to turn a blind eye to any irregularities".
He explains that the challenge was to close a loophole in federal law under which people were not required to prove ownership of cars they were exporting: "We will be asking for new regulations to require Customs to look as closely at what goes out as they do with what comes in."
Nola Watson, the national director, fraud and security risk of the Insurance Australia Group (formerly NRMA Insurance), is another who thinks the stolen car export business is big and getting bigger. "There are just so many cars that disappear and are never seen again," she says.
Watson and Carroll think that the complicating factor in detection is often that the cars are taken apart before being shipped out, so a container does not store complete vehicles but what appears to be a large number of spares.
Watson says that South-East Asia and the Middle East are the most likely destination and concedes it will be a task to expect large numbers of containers being exported to be searched. "And it would be hard to demand provenance especially when the container may just have car parts," she says.
The export theory dovetails into the views of Don Weatherburn, director of the NSW Bureau of Crime Statistics. He says that drugs appeared to be the currency of car crime. Carroll confirms that most car thieves are paid by car rebirthers with drugs.
Says Weatherburn: "We have done surveys and found that thieves were being given drugs in return for their stolen items. We then looked to see where these items were being sold to raise money. We can't find them in Australia. The only conclusion we have reached is that they are being sent overseas."
In the stolen-car business, the export of vehicles that have undergone cloning, rebirthing, recycling or upgrading is estimated to gross close to $1 billion a year. Full of high-tech innovation, entrepreneurship, skill and daring, it is perfectly tailored for the new millennium. At present it's also booming. Profits are so big and easy that it has become increasingly violent and has effortlessly cleared the few hurdles put up by legislators in the hope of slowing its growth.
Some "petrol heads" regard the stolen-car business as a rakish career with attitude, but it costs consumers and insurers plenty. Statistics tell the story: NSW is the disappearing car capital of the country.
Out of the 25,000 cars which vanish each year 12,000 are from NSW. Car dealers have been robbed at gunpoint during test drives, people have been forced out of their vehicles, others mugged just as they were about to get into their cars. Carroll claims there has been an increase in the instances of burglars breaking into houses just to steal car keys.
Mostly expensive cars are the targets. They are either stripped for their parts or rebirthed, a process where the vehicle identification number (VIN) from a car bought at salvage auctions is transferred to the stolen car to give it a new identity. A variation of that is duplication of VIN tags, which means that at the moment any number of cars on Australian roads carry the same VIN.
Then there is "strip and buy back". This is where an expensive car is stolen, stripped and the body shell left where it can be readily found. The insurance company writes the car off and the shell goes through the salvage auction where the thieves buy it, restore all the parts and put it on the market.
If they are asked for receipts for parts they often produce what look like legitimate receipts, but eagle-eyed investigators are now finding the thieves are generating fake receipts on their PCs.
Another variation is with a car such as a Subaru LX which is the "slow" version of the super quick WRX. A WRX is stolen and then the parts are transferred to the LX. Or a humble family Commodore is refurbished with a 5.7- litre V8 stolen from a Holden Special Vehicle from its upmarket SS range.
The cars swirling around this reincarnation business usually end up in the hands of unsuspecting buyers although in some cases, if they thought about what they were buying, people would smell a rat.
In Adelaide last month police seized seven upmarket vehicles believed to have been rebirthed. The new owners bought them privately and still have to meet the payments on loans raised but without having the cars to use.
There is also a growing trade in exports where container loads are sent to northern hemisphere destinations. Police intelligence reports show the business has strong links to the drug trade, organised crime and money laundering.
At salvage auctions around the country legitimate dealers tell of people paying for wrecked vehicles with cash and the sight of up to $40,000 is not uncommon. Often buyers are given money by bagmen who do not bid.
The NRMA's Smithfield salvage auction, in western Sydney, is conducted by auctioneers Pickles. You need to provide identification to get in and before you do so you are scanned with a metal detector for guns and knives, a move introduced after several dealers complained about buyers carrying them in the yard.
The salvage auction attracts big crowds. A recent Wednesday auction saw about 20 people in the car salvage business, the rest of the 500-strong crowd being private buyers.
Before the computer at Queensland's Motor Registry Department was plugged into a national database last month, car rebirthers would buy a vehicle and take it interstate to avoid the NSW wrecks register, the only thing of its sort in Australia until September 30. Until then buyers needed only to ship the cars interstate and rebirth them there to avoid detection.
An NRMA spokesperson said it has refused entry to people and that it has acted to exclude cars that were obviously stripped professionally from going through the market to avoid the strip and buyback scam.
But many dealers think the guidelines should be tougher. One man in the salvage business said: "Look around. There are 20 dealers here and the rest are members of the public. What are they doing here? I think only legitimate businesses should be allowed in. I have been to these salvage auctions in the US and I couldn't get in even though a local salvage businessman vouched for me."
In all states now there are two types of writes-offs: registries list statutory write-offs, which means a car can never be re-registered, and only used for scrap, and economic write-offs, meaning a car can be rebuilt and re-registered but all details of how it was damaged are kept in a central bank.
At registration time, as soon as the VIN is entered it throws up a flag alerting the relevant authority to the car's status. At that stage checks can be made to see if it is the same car that was purchased at the salvage auction.
Carroll believes recent legislation will see a gradual reduction in car disappearance although he admits there are still big gaps in the law.
He says that eventually everyone in Australia when buying a car will be able to make a phone call and discover if the car has been stolen, and obtain its complete ownership history.
He adds that the new national register of written-off cars that came into force when Queensland went online will make the job of rebirthing cars in Australia much harder. But he agrees that the underground industry has been stockpiling embryos which it will be able to live off for some time.
Just before Victoria's wrecks register came online last year there was a flurry of buying at salvage auctions, and dealers reported a similar movement in Queensland as the countdown to September 30 approached.
The question now is whether the national registry will bite.
While industry leaders like Carroll, the NRMA and police are optimistic, the bottom feeders of the car industry, scrap dealers, are not so upbeat.
At Smithfield a couple of Wednesdays ago, one scrap merchant said he was cynically hopeful but wondered how the car thieves could be stymied: "I buy a car for $2000 for salvage and I put a price of say $1000 on the doors and a customer comes in and says he can get the same `down the road' for $500. I know they are hot but what can I do? I can't compete."
