Central Europe Funnels Cars West to East

The tale of 'Tomas': buy a 'hot' German car, report it stolen, pocket the insurance

Low risk, easy money. It was enough of a sales pitch to hook "Zoltan," a Budapest high-school teacher. He was willing to gamble a full year's salary - about $2,400 - to potentially earn double that in a one-time foray into the car-theft trade.

He and his brother "Tamas" would have bought a stolen Volkswagen Golf that had been transported from Germany to a Budapest used-car lot, and resold it a few weeks later.

But ultimately the deal fell through, and Zoltan gave up on the idea. Tamas went ahead alone with a similar scheme this spring.

He shelled out 1 million Hungarian forints ($6,666) for a late-model Audi stolen from Germany, supplied with new identification and registration documents. He kept it for the prescribed three months, then sold the Audi to a gangster for $1,330. The car was promptly smuggled into Russia and resold, while Tamas reported it stolen. He's now awaiting a $13,330 payday from his insurance company.

"Everyone would do almost anything for 500,000 forints [$3,333]," says Zoltan, who did not want himself or his brother identified by their real names. "I know it's a crime, but if so many others are doing it, why shouldn't I?"

There's no shortage of opportunities. Car theft and smuggling from West to East continues to thrive, with Poland and Hungary serving as the primary tributaries into the former Soviet Union and the Balkans. Indeed, advanced antitheft devices and tighter border controls in Western Europe have reigned in such crimes. But with an ever-growing demand from the East, countries like Hungary are now seeing car theft skyrocket on their home turf.

Even international car-rental companies like Hertz and Avis are running scared. For one year, they haven't allowed customers to drive from Hungary into Ukraine, Romania, Bulgaria, or the former Soviet republics out of concern that their cars will be stolen. A customer must tell the company beforehand of his or her intention to cross any border, or border officials will stop the car.

Car theft, like many crimes, barely existed during the Communist regime in Hungary. Selling or trading cars was a job entrusted to a state-run monopoly. The police strictly controlled automobile registration and licensing. When communism dissolved in 1989, private trading was legalized and hundreds of used-car lots sprang up nationwide. The authority to register vehicles was extended to any dealer who claimed a turnover of more than 1,000 cars per year. Together with the opening of borders, these drastic changes cleared a path for car theft and smuggling.

The domestic theft rate peaked at 17,000 in 1991 and 1992, aided by the occasional corrupt police, customs, or border official. In mid-1992 the national police assembled special antitheft units to hunt down the perpetrators; thefts plummeted to 8,000 in 1993.

The police mistakenly thought they'd broken the Hungarian-only gangs and eased off to focus their efforts elsewhere, according to Hungarian Police Lt. Col. Gyula Kardos. But the gangs have come roaring back: 10,500 car thefts in 1994, 12,000 in 1995 (only 469 were recovered), and perhaps 16,000 this year.

So now it's back to the drawing board, says Colonel Kardos.

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