Parliament’s standing committee on public accounts (Scopa) has decided to launch a formal inquiry in the Road Accident Fund (RAF), to delve into mounting allegations of financial mismanagement, including the possibility that the organisation might have an enormous, multibillion-rand unrecognised liability.
The committee said the decision follows months of repeated attempts by the committee to get truthful, complete information from the RAF board and executive management, to little avail.
As it is, RAF CEO Collins Letsoalo is currently under suspension.
A formal inquiry constitutes a step towards criminal investigation, and will allow the committee to call witnesses – from both within the RAF and outside the organisation – speaking under oath.
The decision was taken on Tuesday without a vote, but all parties other than the EFF spoke in favour of a formal inquiry.
ActionSA Scopa member Alan Beesley said in a statement after the meeting that with annual revenue exceeding R50bn, entirely funded by South African motorists through the fuel levy, “the RAF has become a cesspool of mismanagement, corruption and a symbol of state failure”.
He added: “A full and independent investigation is urgently required to uncover the depth of the rot and hold those responsible to account”.
Among the issues that demand formal investigation are:
- The submission of false, misleading, and inaccurate information by the RAF board and CEO in previous appearances before Scopa;
- The intentional vacating of crucial senior positions, including of the chief claims officer, head of claims operations and head of legal services;
- A legal division that is chronically understaffed and lacking in expertise;
- The abuse of state resources to target, intimidate and dismiss competent staff, including ignoring court orders to reinstate employees;
- The failure to defend matters in court, resulting in numerous costly default judgments;
- Dubious procurement practices, including a media contract awarded to two suppliers totalling R1bn; and
- The ongoing, irrational and costly litigation between the RAF and the auditor-general.
‘Makes SAA look like a tea party’
DA Scopa member Patrick Atkinson spoke in support of the inquiry, saying the situation is “deeply concerning”.
“The kind of amounts of money we are talking about could actually dwarf anything else that this committee has dealt with. It could make SAA look like a tea party.”
The problem, he said, is that a large potential liability has been created for the state by the fact that claims have been rejected by the RAF based on its view of the validity of the claim.
However, a large quantity of default judgments against the RAF appear to indicate that huge numbers of claims could in fact be valid.
“At the last meeting, the acting CEO of the fund basically said that 3% of all claims were default judgments by going through court orders. But court papers since January this year suggest the figure is closer to 87%,” said Atkinson.
The fund itself is also not able to differentiate whether a payment is being made to a road accident victim as a result of a court judgment or an agreement between the fund and the victim.
Consequently, the organisation is currently unable to quantify the likely potential liability “but it could run into the tens of billions of rands”.
Scopa chair Songezo Zibi said the scale and seriousness of the complaints necessitate a thorough investigation.
“The volume of complaints and related documentary disclosures to the committee about the RAF make it necessary to examine them thoroughly, and make such recommendations as may be necessary to ensure that the institution does its work within legal and constitutional prescripts, and serves the public interest as intended.
“An inquiry will also give everyone involved or implicated the opportunity to state their case under oath, and receive a fair hearing before the committee draws its conclusions.”
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