RAF’s Letsoalo swerves subpoena as fund’s financial crisis deepens

The parliamentary inquiry into the Road Accident Fund (RAF) naturally wants to hear from former CEO Collins Letsoalo, but when the sheriff arrived at his house to deliver the subpoena, it turned out the property was abandoned. This is the same address he has used in his many strident letters to parliament. 

The misdirection is simply part of a pattern of avoidance and high-handedness that have characterised the actions of the fund, which have become increasingly apparent from the revelations over the past few weeks at parliament’s standing committee on public accounts, which is holding the inquiry. 

Just the fact that the committee has felt it has to subpoena Letsoalo is revealing in itself. Chair of the committee Songezo Zibi said: “I desperately hope he comes because we can’t wait for him to put into perspective the shocking things the committee has heard so far. One of these is that, contrary to his public pronouncements, the RAF went out of its way to discourage direct claims.”

The committee has heard claims that the fund is in such shambles that it now turns out it might require an absolutely humongous taxpayer bailout. These claims were specified more precisely in budget documents that formed part of the medium-term budget heard this week. 

The R422bn problem

The Treasury is projecting that RAF liabilities will increase from R367bn in 2024/25 to R422bn in 2027/28. Revenue is expected to rise from R50.6bn to R67.6bn, but expenditure is projected to grow more rapidly, from R53bn to R90bn.

This would widen the existing funding gap, while the documents point out that a court mandated requirement to process and pay claims within 14 days will add to cash-flow pressures. 

“As a result, the RAF’s financial position is expected to deteriorate over the medium term,” the document says. 

The crisis has been intensified by the fact that the new RAF board has placed several top officials, including the acting CEO, CFO, chief governance officer and head in the CEO’s office, on precautionary suspension with immediate effect. The suspensions are to enable an independent investigation into “administrative and governance matters” within the organisation.

No wrongdoing has formally been found yet, but the fact the board has decided to take such dramatic action suggests there is a strong possibility of something more than simply an administrative issue. 

New board chair Kenneth Brown told the inquiry that the suspended executives had effectively asked the board to lie in a court submission. He was asked to sign an affidavit that he said contained misrepresentations on the extension of the 180-day payment moratorium. 

The high-handedness of this action has just been par for the course for the RAF over the past years, and it has routinely ignored court dates and payment undertakings.

Which is partly why Scopa is so keen to question Letsoalo – if it can find him.

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