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Counterfeit ring smashed in Kenya

NAIROBI, Kenya, May 12 – The Kenya Copyright Board (KCB), Kenya Revenue Authority and the police have broken up a software counterfeit ring responsible for the distribution and sale of more than Sh800,000 worth of counterfeit Microsoft software.

With Microsoft’s support, the Kenyan authorities led several months of investigation, test purchases and raids before arresting the supplier based in Kiambu.

“The unauthorised commercial use of software is a crime, just like theft, tax evasion and fraud,” said Marisella Ouma, Executive Director of the Kenya Copyright Board. “Our country’s intellectual property rights are in place for a reason – to protect consumers and businesses – not line the pockets of criminal organisations.”
The case began back in September 2009 when Microsoft was informed by Customs authorities in the Netherlands that they had intercepted the second shipment in the space of a week of high-quality counterfeit Microsoft software en route from China to Kenya.

“Sadly, Kenya has become a frequent target of this type of global counterfeit operation,” said Edward Sigei, Head of Enforcement for the Kenya Copyright Board. “We are actively pursuing a number of major importers of counterfeit goods, but we continue to rely on Microsoft’s support to help us intercept pirated goods before they reach the resellers and consumers of Kenya.”

In March this year, Microsoft found a reseller in Nairobi offering suspected counterfeit Windows software. The authorities found a match for the samples confiscated six months earlier in the Netherlands and a test purchase was then carried out at the reseller.

After it was confirmed that high quality counterfeit Microsoft Office 2007 was being offered for sale, which included a fake hologram CD and Certificate of Authenticity (COA), a raid was conducted on the retail store and 12 counterfeit copies of Microsoft Office 2007 were seized.

This raid led to the store’s broker being identified. This supplier had also unwittingly supplied Kenyan authorities with an additional 10 copies of counterfeit Office 2007 Professional Edition and led the Kenyan authorities to the source of the counterfeit software.

The supplier was found with more than 20 copies of suspected counterfeit Microsoft Windows XP and is now awaiting his court appearance.

As part of its anti-piracy efforts, Microsoft works closely with the Kenyan authorities to help build cases against counterfeiters that put consumers and businesses in Kenya at risk. Frequently, counterfeit software is vulnerable to computer viruses, malware and hackers, leaving consumers unprotected against data loss or identity theft.

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Meanwhile, honest local businesses have difficulty competing with pirated software that has been priced at below-market levels and are forced to cut jobs. Tax revenue that the government could have re-invested into Kenya suffers.

Microsoft provided similar support to the US Federal Bureau of Investigation and China’s Public Security Bureau that led to the world’s largest counterfeit software ring arrest in July 2007. The public and private sector cooperation was the result of a six-year investigation into a syndicate responsible for the production and distribution of more than US$2 billion worth of counterfeit Microsoft software.

“If you’re unclear about how damaging worldwide piracy crimes can be for Kenya, remember this number: $31 million US dollars,” said Andrew Waititu, License Compliance Manager for Microsoft East & Southern Africa. “That is the total loss to the Kenyan economy due to software piracy in 2008.”

IDC recently reported that if Kenya’s current 80pc software piracy rate was reduced by just 10 percentage points over four years, it would create an additional 977 local IT jobs and contribute $73.60 million to Kenya’s GDP.  According to IDC, that represents an increase in total revenue for the local IT industry of $40.01 million and additional revenue for the government of $7.18 million in taxation.

“Think what a difference that revenue lost to software piracy could make to this country if it were reinvested in education and employment instead, the most important areas for Kenya’s growth,” Waititu concluded.

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