After five years of wide-ranging maladministration, the chickens are coming home to roost for the Road Accident Fund (RAF). On Tuesday, the fund revealed it is facing a staggering R100bn in unpaid claims, double its annual budget.

The RAF has been in emergency turnaround mode after a new board was established six months ago, with a new board chair (Kenneth Brown, a former long-time member of the National Treasury), and the departure of CEO Collins Letsoalo. The latter’s high-handed and imperious management has left the organisation on the brink of destruction.

This became graphically clear in Tuesday’s presentation to parliament’s standing committee on public accounts, ostensibly to highlight progress made so far in re-establishing the integrity of the organisation.

The record is profoundly mixed.

The payment of outstanding claims has remained massively bogged down thanks to the new system introduced by Letsoalo. This included the scrapping of the panel of attorneys system, a move that aimed to cut costs but which backfired spectacularly and resulted in a significant crisis for the entity and a huge increase in default judgments.

The fund, which pays third-party claims of road accident victims, collected R50.07bn in revenue from the fuel levy last year, while its claims expenditure amounted to R46.9bn at the end of the 2025 financial year. Yet, at that point, it was already staring down a backlog of R40.4bn.

This colossal figure excludes its contingent liabilities, which the Treasury set in the 2024 medium term budget policy statement as rising from R353bn then to R423bn by 2027/28.

‘Years to rebuild’

“It’s easy to break down an organisation; it takes years to rebuild it,” said Brown whose six-month term, along with that of the other members of the board, technically ends this week, though many are likely to be reinstated.

The board has now set in place investigations to reverse two of the key strategic decisions of the previous management.

The first is its controversial decision to move away from GRAP and International Financial Reporting Standards to the IPSAS 42 accounting standard. The ostensible reason the RAF did so was to move away from commercial reporting standards to adopt a standard associated with benefit organisations.

However, the actual reason was probably to obscure its own systemic failures.

The issue led to a legal dispute with the auditor-general, which resulted, incredibly, in ill-advised litigation between two branches of state. The RAF ultimately lost this litigation, but contrary to direct instructions from the ministry, decided to appeal the loss. Yesterday, the RAF announced it was returning to the GRAP standard.

The second issue is the panel of attorneys system, in which lawyers practising in the area were typically drafted into disputes to arbitrate and assist the RAF. The new board is investigating whether to re-establish this system as an addendum to its current system, which uses state attorneys. This constitutes a massive climbdown for the organisation, which claimed for years that the scrapping of the board system would save the organisation billions.

Hard realities

The question now is how the RAF’s financial crisis will be fixed. Brown acknowledged that internal savings would not resolve the problem. But he also advised against approaching the Treasury for more money.

“People will say: ‘Hey, the Road Accident Fund is underfunded. It needs more money,’ right? But if you go to the Treasury with that notion, they will start looking at you differently,” he said. “They will say the following: ‘If you look at how inefficient your administration is, you spend close to a billion rand on media, medicals and other areas. You also undertake certain procurements that do not make sense. You could save quite a bit of money there.’ That would be the start of the argument.”

One option for the RAF is to move towards a direct claims model, in which claimants would not have to appoint attorneys to argue their cases. In terms of the Contingency Fees Act, about 25% of claim payouts go to attorneys, which means roughly R12.5bn is spent on administration.

This could potentially save a significant amount of money. “Maybe that view is right, maybe it’s wrong, but we need to brainstorm around it,” said Brown.

As for the culpability of Letsoalo and previous management, Brown said there are a number of forensic investigations taking place, particularly of some shocking procurement decisions. But, he declined to announce them. “We just don’t want to show our hand,” he said.