After years of bruising court battles, ballooning liabilities, and scathing audit findings, the Road Accident Fund (RAF) board may finally be inching towards a reality check. For the first time since the Fund clashed with the Auditor-General of South Africa (AGSA) over its controversial shift in accounting standards, there’s a hint that the board could abandon its legal offensive – and start dealing with the financial mess it tried to paper over.
The RAF’s long-running dispute with the AGSA dates back to 2021, when the RAF abandoned the Generally Recognised Accounting Practice (GRAP) framework in favour of IPSAS 42. The change dramatically reduced the Fund’s reported liabilities from R327 billion to R34bn – a move the AGSA rejected, issuing a disclaimer audit opinion because of non-compliance with accounting standards and insufficient records.
The RAF took the matter to court, but the High Court dismissed its application, noting that the accounting change had not been approved by the Accounting Standards Board (ASB). The Supreme Court of Appeal (SCA) upheld the ruling in both September 2024 and again in March this year, rejecting the RAF’s bid to appeal.
Despite these legal setbacks, the RAF board resolved on 24 April to petition the Constitutional Court (ConCourt) for leave to appeal the High Court’s decision, following the SCA’s March order to dismiss the application with costs.
During a 3 June briefing to Parliament’s Portfolio Committee on Transport, RAF board deputy chairperson Nomonde Mabuya-Moloele said the board would urgently engage Deputy Transport Minister Mkhuleko Hlengwa on the matter at a meeting scheduled for 10 June. This follows concerns raised over the court’s classification of the RAF as an insurer – a decision Mabuya-Moloele warned “would have dire and/or adverse effect on liabilities of the entity”.
She added that after consulting with the deputy minister, the board would reconvene “with a view to reconsider its resolution to appeal the matter to the ConCourt”.
At the same meeting, Hlengwa reaffirmed the ministry’s position that the RAF must cease all further court action on the matter.
“RAF has now three negative judgments against it on the issue of the accounting standards. And I have been very clear with the board that they are to desist from further court action, and it remains the solid position of the ministry that the Accounting Standards Board must be engaged to complete its process on the identification of an applicable and appropriate accounting standard, because that work is under way, and I will not be swayed on that, because I do not believe that it’s for the court to prescribe a standard,” he said.
Hlengwa noted that the AGSA had issued a finding regarding the accounting standards, and it was now the RAF’s responsibility to develop an audit action plan in response. He noted that the ASB had not yet completed its work and called on it to finalise the process “in earnest” to ensure that the RAF has the correct applicable standard.
“The board is aware of this position, that they are to desist from further court action, and that position has not changed, and that position will not change. It is my expectation that they must comply,” he said.
RAF board faces scrutiny over leadership failures
The Portfolio Committee on Transport’s meeting followed an earlier grilling of the RAF by the Standing Committee on Public Accounts (SCOPA) on 28 May. It was during that session that the RAF disclosed it had placed its chief executive, Collins Letsoalo, on special leave.
SCOPA chairperson Songezo Zibi delivered a scathing assessment of the RAF’s leadership and governance. He pointed to key executive vacancies – including the head of legal and chief claims officer – that have remained unfilled for more than two years. Zibi criticised the Fund’s continued reliance on external legal counsel while its internal legal function remains severely understaffed, calling the situation “a mockery of Parliament and oversight”.
Read: ‘A train wreck’: SCOPA chair tears into RAF board over vacancies and fiscal chaos
Zibi also raised concerns about the rising number of default judgments against the Fund. The Special Investigating Unit (SIU) had previously warned that the abrupt cancellation of the RAF’s panel of attorneys – without a suitable transition plan – had triggered a spike in such judgments.
Zibi referenced recent financial losses amounting to tens of millions of rands and questioned the RAF’s claim that the problem was under control.
He further accused the RAF of failing to provide SCOPA with information on the top 10 law firms receiving instructions from the Fund. Zibi claimed the RAF had deliberately withheld this information from the committee for improper reasons.
Following pressure from the committee, the RAF board hastily shared a table during the meeting via a projector. It showed that in the 2024 financial year, Malatji & Co Attorneys Inc received R55.87 million from the RAF, while Maponya Ledwaba Attorneys was paid R30.75m. In the previous financial year, Malatji & Co was paid R15.25m, and Maponya Ledwaba received R14.86m.
Board reverses leave decision, suspends CEO for insubordination
During the session with the Portfolio Committee on Transport, Mabuya-Moloele said the board convened special meetings on 30 May and 2 June to reflect on the SCOPA session. The result was a reversal of its earlier decision to place Letsoalo on special leave.
“And in light of the above, the board went further to resolve that we must then come up with a legally sound decision, and that decision is to suspend the CEO for insubordination, related to his refusal to appear before the SCOPA sitting scheduled for 28 of May 2025,” Mabuya-Moloele said.
Acting CIO placed on precautionary suspension
The board also resolved to place acting chief investment officer Sefotle Modiba on precautionary suspension with immediate effect, on full pay and benefits.
This development follows earlier reports by Currency News in February that Modiba had previously faced charges of gross negligence, dishonesty, and dereliction of duty during his time at the City of Johannesburg. The charges became public through a Promotion of Access to Information Act application in a related RAF court case.
Until recently, the RAF declined to say whether it was aware of the charges when it appointed Modiba in 2023.
“This decision arises from concerns regarding his previous employment in the City of Johannesburg and the other matters that are currently under investigation. This suspension does not constitute a disciplinary sanction, nor does it imply any adverse finding or assumptions of wrongdoing against him,” said Mabuya-Moloele.
Executive appointments now a priority
The board has instructed management to prioritise filling all vacant executive roles, including the positions of chief claims officer, chief investment officer, chief corporate support officer, and head of legal services.
“Meanwhile, management was directed to appoint acting officials in the positions of the chief claims officer in the interim, while the CEO is under suspension, the chief investment officer, the head of legal, and the head of people management,” Mabuya-Moloele said.
She added that the board and its Remuneration, Human Capital, Social and Ethics Committee will continue monitoring acting appointments quarterly to ensure permanent placements are made “expeditiously”.
Default judgment oversight strengthened
Mabuya-Moloele said the board continues to monitor quarterly reports on default judgment statistics through its Risk, Governance, Actuarial and Legal Committee (RGAL), a sub-committee of the board.
“This committee has got the right expertise to exercise oversight and to ensure that there’s proper control in ensuring that the state attorney model is operating well to cap the unnecessary escalation of default judgments,” she said.
A report on default judgments is expected to be submitted to SCOPA by 13 June.
Concentration of legal work triggers review
Zibi’s demand for transparency around legal firms showed that two of the 43 law firms on the Fund’s corporate legal panel – Malatji & Co and Maponya Ledwaba – have received 83% of its legal work in 2024.
Mabuya-Moloele said the board has resolved to assess the outcomes of all court cases involving these two firms to determine whether the RAF is receiving value for money.
“Further, management must provide exploratory reasons relating to the preferential treatment given specifically to these law firms, as it was clear that they were getting 83% [of work] over other firms on the corporate legal panel,” she said.
The RAF board is awaiting a full report from RGAL on the matter.
However, the board’s recent flurry of decisions may be too little, too late, as members of the Portfolio Committee on Transport openly questioned whether it should remain in place.
