South Africa’s Road Accident Fund being bled dry – this is who’s to blame
The Road Accident Fund’s (RAF) CEO Collins Letsoalo says the fund fears being bled dry by ‘suspicious, exorbitant’ claims – but the Special Investigating Unit (SIU) has pointed to multiple failures, including corruption.
The RAF, which recorded a R8.43 billion deficit for the 2022/23 financial year, recently revealed that it is struggling to get on top of mounting claims, recording a backlog of over 321,000 – largely due to missing supporting documents.
In an interview with City Press, Letsoalo said that not only has the number of claims gone up, but so has the number of crash victims claiming, with recent individual claims amounting to the hundreds of millions.
Letsoalo largely laid the blame for ailments in the fund’s fiscal position at the feet of non-South Africans for having “exorbitant” and “suspicious claims.”
Although opportunistic claims are a key factor in the RAF’s issues—and fraudulent claims by both foreign and locals are being investigated by authorities—the extent to which “foreigners” are responsible for the RAF’s dire fiscal position largely does not coincide with preliminary information provided by the SIU.
Years of predatory litigation combined with internal administrative problems have merged to form an almost perfect storm for the fund.
Letsoalo cited several high-priced claims made by non-South Africans that made up hundreds of millions of rands each and made these statements following a recent High Court judgement which declared a regulation from the Department of Transport and a management directive from the RAF invalid.
The regulation and directive attempted to prevent foreigners who were in South Africa illegally from submitting claims against the RAF. According to the RAF Act, non-South Africans are legally entitled to compensation from the RAF.
The State Investigating Unit (SIU) has been investigating “serious maladministration in the affairs of the RAF” and “any irregular, improper or unlawful conduct” for quite some time now. The full investigation is expected to be completed by mid-2024.
Preliminary findings by the SIU have found that the reasons for the RAF’s woes go beyond what the CEO is revealing. The investigation has found that the RAF is indeed being bled dry but by more than just “opportunistic non-South Africans.”
The SIU has identified:
- Procurement and tender irregularities (Fruitless and wasteful expenditure);
Eight contracts under investigation by the SIU for dubious procurement processes were flagged by the Auditor General.
A major irregularity was flagged when the RAF cancelled a contract with its panel of attorneys in 2018, seeing R4.78 billion in default judgments ordered against them afterwards (up to the second quarter of 2023.)
- Duplicate claims-payments made to attorneys, claimants, sheriffs, and change of mandates;
As of March 1, 2021, 102 law firms have been found to have received duplicate payments from the RAF, amounting to over R340 million (93,4% has been recovered by the SIU).
- Payments made to service providers in terms of RAF Act and/or contract;
The allegations that the SIU is investigating include the overpricing of services and inflating invoices submitted to the RAF.
So far, the investigation has identified possible collusion between RAF employees and service providers.
- Fraudulent claims by both foreign and South African individuals.
There are allegations that there was an attempt to change the bank account/s of the service providers.
So far, the SIU has found that RAF employees “made fraudulent [bank] account changes on the RAF system and redirected monies meant for services providers into their personal bank accounts.”
A further outline of the SIU’s preliminary findings can be found below:
Preliminary systemic recommendations from the SIU for the RAF include:
- Periodic bank reconciliation in order to prevent and detect possible duplicate payments;
- Prior to effecting payments, perform checks and balances on whether there had been any writs of execution on the claim;
- Perform a review of the claims payment process.
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