Deny and dissemble: RAF’s CEO lashes out

In a performance reminiscent of former SABC CEO Hlaudi Motsoeneng at his peak, Road Accident Fund (RAF) head Collins Letsoalo on Monday responded to multiple preliminary findings by the Special Investigating Unit (SIU) in a disjointed, contradictory and wide-ranging press conference.

Not only did he defend the technically bankrupt organisation he has led since 2019, but he evaded questions, dissembled and may even have lied.

Not that you’d get the sense that Letsoalo is a man under siege. “I sleep nicely at night knowing I’ve got nothing to fear, whether it’s an SIU investigation, any form of investigation, public protector’s investigation, whatever. I’m open to that,” he said at one point in his almost two-hour diatribe.

The immediate issue for the crisis-ridden fund is the allegation that Letsoalo personally intervened in a R79m lease deal for the fund’s Joburg offices, where he’d overturned the bid committee decision in favour of Mowana Properties. This losing bidder went on to secure a five-year contract.

Letsoalo claimed he was acting within his rights as CEO, pointing out that the bid evaluation committee (BEC) was appointed by him. “I’m not a rubber stamp of the BEC. Imagine the headlines. If I just allowed a process where some people go evaluate something and one person gives the same building a five, another one gives it a one. Imagine. So when I ask what’s happened here, people say, ‘we’re withdrawing this’.”

He also claimed one of the members of the BEC, a purported whistleblower, was later accused of sexual harassment and subsequently “left” the organisation. Challenged on this statement, Letsoalo was forced to acknowledge that this whistleblower was in fact fired. (According to documentation provided by the whistleblower, the reason was explicitly not to do with the claim of sexual harassment, which the accuser had apparently recanted under cross-examination.)

Asked whether all the other members of the BEC had been fired too, Letsoalo claimed this was not in fact so, and they were still members of the organisation. But according to the whistleblower’s representative, William Burns, three of the four members of the BEC, whom he named, have indeed been sent packing, while the fourth “may still be on a three-year suspension pending dismissal”. 

If that wasn’t bad enough, Letsoalo claimed during the press conference that he was unaware the whistleblower was the chair of the committee, which is flatly contradicted by extensive communication between legal representatives in the case.

In his defence, Letsoalo produced a Treasury document endorsing his decision to scrap the finding of the BEC; he claims the RAF board also backed his decision. 

R8.3bn in claims

Letsoalo’s conduct matters given the import of the fund, a state-supported insurance fund that provides compensation to the victims of road accidents in South Africa, which is paid for through a large levy on the petrol price (R2.18 per litre).

And it is on the financial skids, with thousands upon thousands of court execution orders against it, crippling the legal process and denying road accident victims compensation.

Claims specifically ordered by South African courts are understood to top R8.3bn. The interest on the outstanding claims alone comes to about R2bn a year. So it matters that Letsoalo answers to charges of mismanagement, despite his claims that he is simply under siege by detractors trying to portray him as corrupt and incompetent, given that his contract expires in August.

While the RAF has a budget of R50bn, it posted a deficit of R1.6bn in the 2023/24 financial year. Its total liabilities have escalated to more than R300bn, massively exceeding its assets. In Letsoalo’s telling, however, he has saved the government R36bn since becoming CEO. Or is that R24bn? Letsoalo used both figures in the course of the presser.

He said that 80% of the organisation’s targets have been met, and ascribed complaints against the RAF as a consequence of this saving. “When you take R36bn away from people, you expect it. It’s gonna come. Turning around the RAF is not for sissies … anything you’re going to do, as long as it does not benefit lawyers, medical schemes, actuaries, doctors, you are not going to be liked,” he said.

The issue of the overturning of the BEC’s decision in the case of the RAF’s Joburg head office was just one of several issues involving the SIU’s report, but an issue that was extensively discussed that was not part of the investigating unit’s findings was the RAF’s controversial decision to audit itself as a social benefit organisation in terms of international public sector accounting standard (IPSAS) 42.

The auditor-general’s office has repeatedly required the RAF to adhere to the generally recognised accounting practice (GRAP) standard partly because, as a result of its insistence on applying IPSAS 42, the RAF has consistently received adverse and disclaimer audit outcomes.

Letsoalo released an extensive letter documenting the RAF’s consultations on the accounting decision with the Accounting Standards Board (ASB), which he claimed did not oppose the RAF’s decision. This despite the letter explicitly stating that the ASB is not an advisory body – and while the body did not oppose the RAF’s accounting approach, it did not endorse it either. 

And that issue is now moot because the RAF’s legal battle to have its accounting policy endorsed has been rejected in court, and leave to appeal has also been rejected. 

Ignoring court orders?

As for the RAF’s decision in 2020 to scrap its panel of attorneys – a method of using the private sector to facilitate personal injury claims and advice on appropriate cash payouts for road accident victims – Letsoalo defended that too.

The SIU estimates that the total amount of default judgments issued against the RAF for costs and fees from 2018 until the second quarter of 2023 amounts to  R4.8bn.

Yet, “the panel is not coming back”, said Letsoalo. “People must disabuse themselves of the idea of it coming back. That is how we saved R24bn in five years. So, are we still happy with that decision? Absolutely.”

However, critics of the RAF say these claimed “savings” are not actual savings at all – they are the result of the RAF massively reducing the number of payments it makes by simply ignoring court orders. Consequently, the claims are delayed, as the huge decline in the number of payments reflected in the RAF’s annual reports show. 

And as for staying on: well, Letsoalo says he’s not only available to be CEO for another term when his term expires in August, but that he expects to be reappointed.

_{Top image: RAF CEO Collins Letsoalo. Picture: Gallo Images/Papi Morake.}