With the state-mandated Road Accident Fund (RAF) facing financial challenges and taking to court those who try to hold it accountable, serves as another strong example of how woefully inept the state is commercially. But this parastatal specifically, is making plenty more enemies of the state.
Over the last few weeks organisations representing various pockets of the legal fraternity sent a scathing memorandum to Parliament about the ongoing crisis at the fund, following the Deputy Minister of Transport, Lisa Mangcfu, and the fund itself, blaming the attorney for the funds’ woes.
According to GroundUp, the memorandum addressed, among a plethora of issues, previous remarks by the Mangcu and RAF CEO Collins Letsoalo, which blamed lawyers for issues such as backlogs and payout delays. But it also reported, in terms of the memorandum, the lawyers said RAF’s decision to do away with panels of attorneys who previously investigated claims, and managed litigation and settlements – had proven disastrous.
The National Association of Democratic Lawyers – one of the signatories – for one, added that the fund was lagging in registering and processing claims and member of the association’s Member spokesperson Lizelle Haskins said delays posed a severe threat to road accident survivors.
Just over the last year, a full bench of the North Gauteng High Court in Pretoria in April 2021 gave the RAF a reprieve of 180 days to pay all claims based on court orders already granted or settlements reached, which were older than 180 days. The court at the time ordered the RAF to make payment of the oldest claims first.
In August last year, Letsoalo obtained yet another reprieve of six months in which to make these payments. In March, Letsoalo filed another urgent application for an interim order to give the RAF a further reprieve of 12 months. The embattled Fund is still exploring options to pay more than the R14bn it owes to road accident victims,
What will probably further limit current or future claimant cases is that in July, the RAF also increased the cap on its claims in line with inflation. The new cap for maximum claims is R347,730, with effect from 31 July 2023, the RAF said. The changes were gazetted on Friday (28 July).
The caps apply to the two limits currently imposed on claims relating to a loss of income or support (if the breadwinner is killed) due to a road accident in South Africa. The caps are hiked periodically in line with inflation.
Drivers can still claim for all medical expenses arising from injury – provided it wasn’t a pre-existing injury before the accident – with no cap or limit applying.
But in the recent memorandum, the lawyers said the “narrative” blaming lawyers for the RAF’s problems is intended to distract attention from the ineptitude and negligence of the RAF, a taxpayer-funded statutory body responsible for covering the costs incurred by victims of road accidents.
Speaking to Newzroom Afrika, Haskins said the RAF is the country’s most prominent litigator, requiring a “suitably” qualified leader with appropriate experience to understand how the organisation should operate within SA’s legal system.
“When we look at what has happened since the appointment [of the current CEO], starting from June 2020 – what you see is a dysfunctional RAF,” Haskins said.
“…Not only in terms of the administration…[but also] how they represent matters in court,” she added.
The Democratic Alliance didn’t take long to join this pity party, and in a release this past week said it will call on the parliamentary portfolio committee on transport chairperson, Regina Mina Mpontseng Lesoma, to request a joint memorandum regarding the mismanagement of RAF be tabled and extensively discussed by the committee. The committee must develop actionable steps to address the outlined issues.
The political party agreed that at the core of the problem lay the appointment of Letsoalo as CEO of the RAF, a position that required substantial knowledge of litigation processes and the South African legal framework. ”Yet, Letsoalo, by his own admission, possesses only a basic understanding of these critical areas. The memorandum also criticises the disbanding of the RAF’s panel of attorneys, which left the RAF without legal representation for approximately a year,” it said.
Who knows if this will help, as the RAF has been a topic of discussion and disgust – on many fronts – and in the halls of Parliament, at least a few state departments for over two decades. Even The Standing Committee on Public Accounts (SCOPA) was initially barred from concluding a week-long oversight of Pretoria-based RAF headquarters at the end of June. In a parliamentary notice, Scopa stated that: “the meandering hallway of RAF’s offices was littered with boxes upon boxes lining the walls, spilling onto the floor in a manner that resembled the clutter of a dumping site. The committee also learnt that most personnel are squatting in offices belonging to others and have brought their own chairs to sit on because much of their office furniture has been confiscated by an order of the sheriff due to RAF’s failure to abide by several court rulings. Office desks and chairs currently in use bear sheriff stickers, signalling their imminent attachment.”
The Road Accident Fund Act of 1996 established the current iteration of the RAF and before adopting the new constitution in 1996, the fund that compensated parties involved in road accidents was called the Multilateral Motor Vehicle Accidents Fund, established by an act of the same name in 1989, and administrated by the private sector.
Since then it has been in the government’s hands and under the supervision of the Department of Transport, and for lack of a better term: run into the ground. Not only is it tied up in court more than Jacob Zuma and Busisiwe Mkhwebane combined, its financial position is an absolute joke.
The RAF has achieved only one clean audit in the past five years. Since 2018-19’s unqualified audit, and with the exception of the following financial year, outcomes have become progressively unacceptable.
Of particular significance is the “disclaimer” opinion and audit report issued by the Auditor-General (AG) in 2020-21. It is considered one of the worst possible outcomes, as it implies the RAF failed to provide the required financials on which to base an audit.
More specifically, the AG, Tsakani Maluleke, noted she was unable to procure audit evidence for claims liabilities and claims expenditures totalling R27.8 million and R37.1 billion respectively, as disclosed on the financial statements.
So not playing by the rules is costing South African society dearly, in being stuck with the bill of an insurance fund that doesn’t cover risk, or at least can pay for it when the time comes.
In a nutshell, the RAF provides personal injury and, when applicable, death compensation to those injured in motor vehicle accidents provided the accidents weren’t caused solely by them. The person responsible for the accident is also, in terms of the legislation, indemnified against any claims for compensation for bodily injury.
According to the local law firm – DSC Attorneys – which has branches across the country, drivers, passengers, pedestrians, cyclists and motorcyclists can all claim from the RAF, as long as they were not entirely responsible for the accident. Every time you purchase petrol or diesel, you automatically contribute to a statutorily prescribed levy, which is used to finance the fund.
At the time of writing, however, the Pretoria High Court was still to address the matter of whether all foreigners – or only those able to provide proof of being in the country legally at the time of injury – can claim RAF compensation in South Africa.
“However, in June 2022, the RAF published a new directive stating that an RAF claim by a foreigner would be rejected if the claimant couldn’t show documentary proof that he or she was legally in South Africa,” DSC Attorneys stated.
In 2023 RAF is still functioning and processing claims. However, 2022 was a year of unprecedented dysfunction. And with the latest annual report still outstanding, little is known if anything was done about it. A series of South African court rulings, including a 2023 ruling against the RAF’s CEO and board, may now be forcing the situation to a head. We hope this will trigger positive change.
PERSONAL FINANCE
