By Amanda Yong

HE LENT his car to a business associate. And when the person did not return it, Mr Fahmi Rais, 41, ended up being caught in a financial bind.

Firstly, he has to fork out $1,080 monthly for his car loan for the next three years. He also has to pay its annual road tax of $800.

Thirdly, he can't de-register the car and get back its Preferential Additional Registration Fee (Parf) and Certificate of Entitlement (COE) rebates.

On top of that, it is likely that his insurance policy will not cover the loss of his car.

The reason? His case has been classified as criminal breach of trust (CBT) and not theft.

Mr Fahmi, the chief executive officer of a local communications company, showed The New Paper copies of his police reports and a Land Transport Authority (LTA) letter classifying his case as CBT.

CBT occurs when property has been dishonestly misappropriated by someone who has been entrusted with it.

On the other hand, theft is defined as taking away the property without the owner's consent.

Mr Fahmi said: "What's the difference between my car being stolen from a carpark, and my car being stolen by someone I know? Why is it that just because I lent the car to him and he doesn't return it, it's not counted (as theft)? At the end of the day, my car is gone."

Mr Fahmi said his business associate, also 41, had asked to borrow his silver Opel Astra convertible last July.

At that time, they were working on a business project together.

"I agreed because he needed to run around and do a lot of things (for the project)," said Mr Fahmi.

"I'd known him for 10 years and I'd no reason to distrust him. I allowed him to use the car out of kindness."

The two men had a verbal agreement that it would be used only for the project.

Mr Fahmi had paid $116,000 for the car five years ago and taken a bank loan of $101,000.

Didn't answer calls

In early August, the man asked if he could drive the car to Malaysia for three days as part of the project. Mr Fahmi agreed.

The day after he was supposed to return to Singapore, another business associate involved in the project called Mr Fahmi to ask where the man was.

"I tried calling him every day for two weeks but he didn't answer any of my calls," said Mr Fahmi.

He did not lodge a police report until two weeks later as he was busy "fighting fires" to meet the looming project deadline.

"I also wanted to give him the benefit of the doubt. I thought that he might have been involved in an accident or detained," said Mr Fahmi.

"I also refused to believe that a friend I helped would cheat me like that."

But, as the days passed, he realised he might never get his car back and made a police report.

When Mr Fahmi tried to de-register his car,he was told by the LTA that he could not do so. "Why do I have to pay road tax for a car that I don't have and can't use?" he said.

When contacted, an LTA spokesman said road tax is payable as long as the car has not been de-registered, regardless of whether it is being used.

She said Mr Fahmi can only de-register his car three years after the date of the police report. This is to give the vehicle owner and the police "sufficient time to recover the missing vehicle and to conduct the necessary investigations", she added.

When he de-registers the car then, he will be eligible for the Parf and COE rebates.

But the catch is that the rebates are calculated based on the date of de-registration, which means he gets a lower amount than if it was de-registered immediately.

The spokesman said if Mr Fahmi's car is not recovered, it will be automatically de-registered when its COE expires, or after a year of non-payment of road tax, whichever is earlier.

But in the last scenario, Mr Fahmi would still be required to pay that year's worth of road tax arrears, she said.

Apart from having to pay road tax for the next three years, Mr Fahmi is also unlikely to get a payout from his car insurance policy.

He has notified the insurance company but has yet to receive a reply.

The New Paper contacted three insurance companies - AXA, AIG and NTUC Income - and all said their policies do not cover the loss of a vehicle due to criminal breach of trust.

Ms Irene Wee, senior corporate communications manager at AXA Insurance, said: "If the car is stolen by someone who has permission from the insured to drive the car, then the claim would not be payable under our motor policy.

"It is a common condition under a motor policy that the insured must take reasonable care to safeguard the vehicle from loss. So the insured must be careful who he lends the vehicle to." AIG spokesman Cady Ho also said owners should exercise caution when entrusting their vehicles to others, be it a close friend, family members or acquaintance.

But things would have been different if Mr Fahmi had lost his car through theft.

The LTA spokesman said he would be allowed to de-register his car three months after making a police report.

He would then get its Parf and COE rebates and no longer have to pay its road tax.

Insurance policies also provide for loss of vehicle due to theft and this would likely have covered his outstanding bank loan.

Mr Fahmi said he used the car on weekends and to drive to Malaysia. He had planned to scrap it in February this year.

He has another car, a Honda Odyssey, which he bought four years ago after he started a family. Friend can be thief

Mr Tan Kin Lian, former chief executive of NTUC Income, said he didn't know why insurance companies won't cover vehicle losses due to CBT, but he disagreed with this policy.

He said: "I don't think they should be making a distinction between CBT and theft. If your car is stolen, it's stolen.

"Who says a thief can only be somebody you don't know? A thief can also be a friend."

He added: "Insurers should trust their policyholders. It's easier for a policyholder to say that he drove his car to Changi, parked it there and it went missing than to say that he lent the car to a friend and the friend disappeared with the car."

Mr Gerard Ee, former president of the Automobile Association of Singapore (AAS), also said he was not aware of why insurance policies do not cover CBT cases.

"Perhaps, when the owner lends his car to someone he trusts or thinks he can trust, he is seen as having to bear some responsibility," he said.

Mr Ee also felt the three-year wait to de-register the vehicle should be reconsidered as it is "a pretty long time".

"Why the magic number of three years? It's a question of a reasonable period of time and maybe one year would be sufficient," he said.

His advice for car owners: "If you're only lending it for an hour or a day, then that's fine, but anything more than that is beyond reasonable use."

This article was first published in The New Paper.