Road Accident Fund is at a crossroads

The Road Accident Fund’s board has finally been dissolved – but will Transport Minister Barbara Creecy’s move bring long-overdue relief to frustrated claimants, or make a broken system even worse?

In an interview with eNCA, Ngoako Mohlaloga, the deputy president of the Association for the Protection of Road Accident Victims, expressed cautious optimism.

“The RAF can still be saved. We have got expertise around us to help fix the RAF meet its mandate – put the right people in the right places and get the RAF to be functional.”

He said the organisation is hopeful that dissolving the board will not negatively affect people waiting for their claims to be processed.

“There are systems within the RAF that should be used to compensate victims who have been waiting for quite some time, who have been in the system. We are hoping that whatever decision the minister has made, it will be in the best interest of the victims.

“We are hoping by December the minister will further strengthen the resolve of the RAF and the ministry to make sure victims get quick responses to their claims.”

Why the board was removed

In a media statement issued earlier this week, Creecy cited several key issues confirmed through oversight and regulatory engagements. These include:

• Costly and prolonged litigation over accounting standards, which has strained the RAF’s financial resources.
• The inconsistent and reckless handling of the chief executive’s suspension, leading to legal challenges and uncertainty.
• Repeated default judgments against the Fund, worsening its contingent liabilities.
• Deep divisions within the board, with most resolutions passed using casting votes instead of consensus.
• The failure to fill two critical executive posts: chief claims officer and the head of legal.

Read: ‘A train wreck’: SCOPA chair tears into RAF board over vacancies and fiscal chaos

Creecy said these failures had led to a loss of confidence in the board’s ability to govern effectively.

On 5 June, the minister issued notices to the 11 board members, providing them with an opportunity to respond to her intention to dissolve the board. After considering their representations, she proceeded with the dissolution.

To maintain continuity, Creecy has asked National Treasury to appoint an interim accounting authority in terms of the Public Finance Management Act. She has also initiated a public recruitment process to appoint a new board and ensure a transparent, merit-based selection.

In addition, an expert advisory committee will be established to review the RAF’s business processes and recommend operational and governance improvements. The names of the panel members will be announced in due course.

Parliament backs the decision – but flags leadership vacuum

The chairperson of Parliament’s transport portfolio committee, Selelo Donald Selamolela, welcomed Creecy’s decision to dissolve the RAF board, describing it as a necessary intervention to address deep-rooted governance failures at the troubled entity.

In an interview with Newzroom Afrika, Selamolela said the portfolio committee appreciated the minister’s decisive response to the RAF’s challenges and supported the move to clear the way for the appointment of a new governance structure.

He noted that the RAF has been mired in multiple problems, and a strong leadership team is needed to “zoom quickly into the space and resolve some of the challenges that exist”.

He expressed concern over the current leadership vacuum, with both the board dissolved and the CEO suspended. Selamolela said it was critical that the proposed expert advisory committee begins its work as quickly as possible to ensure continuity at the Fund.

“Now, as we sit here, we don’t have a board [and] at the same time, we have a CEO who’s also on suspension,” he said. “So now you would want to close that term as speedily as possible. Secondly is that you need to bring men and women of stature and repute who understand their judicial responsibility – not just for the sake of the entity, but for the sake of the beneficiaries of the entity, but also for the benefit of the people of South Africa in general.”

Selamolela also emphasised the need for accountability, saying there must be consequences for governance failures.

“There was a mockery in terms of governance. It’s distasteful, it’s unacceptable. It’s something that we must at all times treat with the contempt it deserves,” he said.

Meanwhile, the Special Investigating Unit’s ongoing investigation into the RAF – initiated by President Cyril Ramaphosa in August 2020 – continues to probe allegations of maladministration, corruption, and misconduct within the Fund.

Creecy confirmed in her statement that a request had been made to the SIU to determine whether the current investigation covers events from the past three months. If not, she said a formal request would be submitted to expand the scope.

This will run alongside a full-scale inquiry into alleged procurement irregularities and governance failures at the RAF, launched by Parliament’s Standing Committee on Public Accounts last month.

Read: Wake-up call for RAF as SCOPA prepares for full-scale inquiry

Hearings are expected to begin after Parliament’s August recess.