RAF CEO suspended while the board ducks for cover

The board of South Africa’s beleaguered Road Accident Fund (RAF) has increased the severity of the rustication of its CEO Collins Letsoalo, converting his “special leave” into a “precautionary suspension” following a fractious standing committee on public accounts (Scopa) meeting last week. 

The suspension stems from allegations of insubordination, notably his refusal to attend the Scopa meeting, and follows allegations of financial mismanagement and corruption. During his suspension, Letsoalo is prohibited from accessing RAF premises, communicating with staff or board members (except the chair), and handling any RAF property or systems. He is required to remain available during working hours for any inquiries related to the investigation.

The increased severity of the suspension constitutes an embarrassment for the RAF board, which itself came under fire at the Scopa meeting. Several politicians asked questions about the legal character of “special leave” and openly questioned whether the decision was an attempt to shield Letsoalo from being quizzed about an ongoing Special Investigating Unit (SIU) probe into the RAF. 

The SIU has referred several aspects of the investigation for criminal and civil assessment, including a controversial R79m lease deal for the RAF’s Joburg office, a R5.3m vehicle leaseback scheme, and other alleged procurement irregularities. 

More broadly, the RAF has been decimated by a decision of the fund in 2021 to dispense with the services of public sector adjudicators into road accident liability claims, leading to a huge buildup of unpaid claims. The fund administers about R45bn annually, but now has an accumulated deficit of about R25.5bn, with total liabilities substantially exceeding total assets. 

Letsoalo, who earns about R900,000 a month, remains defiant about his management of the fund, claiming in a Newzroom Afrika interview that over the past five years, the fund has saved about R50bn. He broke this down into R30bn in illegal fees, R14.5bn in medical fees, about R3bn being paid to illegal immigrants, and some other savings. “I am quite comfortable that we have done very well,” he said. 

Industry figures strongly dispute these numbers, with professor Hennie Klopper, a former private law professor at the University of Pretoria, pointing out that the RAF’s inability to process claims efficiently has left more than 104,000 victims without recourse. In the 2022/23 period, out of 107,000 claims lodged, fewer than 3,000 were finalised. Not finalising claims is not equivalent to “savings”, he has said in previous interviews.  

The mismanagement has also resulted in huge increases to avoidable litigating, with Klopper estimated that over the past two decades, approximately R48bn has been wasted on this practice.

Letsoalo’s letter of suspension

_{Collins Letsoalo (Gallo Images / Sowetan / Kabelo Mokoena) / Rawpixel/Gallo/Currency collage.}