The state-owned company waging war in court with no head of legal

The Road Accident Fund (RAF) has been sitting without a head of legal or Chief Claims Officer for over two years, while constantly litigating — and losing — in court.

This was uncovered by parliament’s Standing Committee on Public Accounts (Scopa) this week, during a feedback session on the SIU investigaton into allegations of corruption at the entity.

The session was supposed to be about the SIU probe into RAF chief executive Collins Letsoalo, who was placed on special leave this week, but instead veered into a dressing down of the board regarding its legal failings.

Specifically, Scopa chair Songezo Zibi probed RAF chief governance officer, Mampe Kumalo, on the fund’s ongoing litigation with the Auditor General of South Africa over its audit outcomes.

Kumalo was introduced as the RAF’s “head of legal”, but later pointed out to Scopa chair Songezo Zibi that she was not head of legal. That position had been sitting vacant for over two years, she said.

Zibi was left stunned by the response, noting that an entity whose work is heavily reliant on the court system and was losing millions of rands through failed litigation was doing to with no legal principal.

It was later confirmed that the RAF also had no Chief Claims Officer — another role critical to its functioning.

Kumalo said her office relies on three senior legal officers to handle litigation, but none were suitable for the role of head of legal as they were still finding their feet in their roles.

The revelation was shocking in the context of the RAF’s ongoing legal challenges and losses in the courts.

The RAF is currently locked in a protracted legal battle with the Auditor General of South Africa (AGSA) over its audit outcomes.

As the group’s liabilities continued to surge over the years, it unilaterally decided to change its accounting standards in 2019.

This saw its liabilities drop from R327 billion in 2019/2020 to just R34 billion the following year.

However, the new standard being used by the RAF is not approved or allowed by the country’s public finance laws, leading to negative audit outcomes.

The RAF has lost every legal case it brought challenging these outcomes, and most recently had its bid to appeal directly to the Supreme Court dismissed.

“This is the situation we have now. You have embarked on expensive litigation…a competent legal officer would know there are no reasonable prospects of success,” Zibi said.

“This entire frolick has taken place with no head of legal at the Road Accident Fund. It’s wild.”

According to Zibi, this is only one of the embarrassing litigation sagas being played out in the courts.

He flagged a series of other disputes that have led to a surge in costly default judgments against the fund. This has led to a massive backlog in court cases, some of which will only be heard in 2030.

These default judgements against the RAF are being made to the tune of tens of millions of rands.

The Scopa chair referred to a recent court ruling where the RAF tried to have a default judgment rescinded, but sent an attorney who told the judge they weren’t there to argue, just observe.

He said the situation within the fund had reached a breaking point.

“Vacancies in critical positions, litigation without a head of legal, people in positions who are still trying to find their feet, lawyers who rock up in court to try and overturn a matter and they don’t argue it,” he said.

“This situation cannot continue any longer. It’s making a mockery of this Parliament and oversight.”