Hearing on Road Accident Fund and Road Infringement Agency Annual Reports and Financial Statements for 2010/11

Public Accounts (SCOPA)

08 May 2012
Chairperson: Mr T Godi (APC)
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Meeting Summary

The Standing Committee on Public Accounts held its hearing on the annual reports and financial statements for 2010/11 for the Road Traffic Infringement Agency (RTIA) and the Road Accident Fund (RAF).

The Agency was subjected to strong criticism over a number of issues, starting with the non-attendance at the meeting of the Director General of Transport and the Chairperson of the RTIA board.  The lack of organisational structures, budgeting and poor planning came under scrutiny,
with Members quoting the Auditor General’s (AG’s) statement that the RTIA had no systems of control over traffic revenue, hence it was unable to account for all that it had inherited from the Road Traffic Management Corporation.  It was also taken to task for challenging a finding by the AG that there had been irregular expenditure of R1,1m.

The Agency said some of the problems in submitting accurate financial reports could be attributed to the Electronic National Traffic Information System (eNaTIS), stating that static reports could not be relied on from the eNaTIS, as it was an online real time information-based system.

It was brought to the Committee’s attention that the Department of Transport had stated that at best, only 60% of traffic infringement funds were actually recoverable due to several factors, which included the feeding in of wrong or incorrect data into the system. The RTIA was asked if it would ever be financially viable as it seemed government had created an entity that would never be financially viable and if so, why did it exist?  The Deputy Minister stated that the agency was a creation of Parliament and not the Department. It was set up by legislation in 1998 and had not come into existence until 2010. He pointed out that the legislation creating the Agency, and the reality of the Agency itself, were extremely challenging. There were about 270 issuing authorities across all municipalities, and many of the municipalities which were cash-strapped generated their resources through fines.  The municipalities were therefore reluctant to submit the resources generated from traffic infringements. The problems with the agency were therefore mainly systemic problems, but despite this, it could be established as a going concern, although at a much more impaired figure than what was reflected in the annual report.

Among other issues raised were: what had happened to the R292, 8m pertaining to trade and other receivables which the AG’s report had stated it had insufficient audit evidence to confirm completeness, valuation and existence; why the RTIA had not disclosed its irregular expenditure and had violated all forms of procurement procedures; why the National Treasury requirements on procurement were ignored by the RTIA; and why the RTIA had not submitted its strategic plan to the executive authority at least six months before the start of the financial year in contravention of the requirements of the National Treasury.

The hearing on the RAF focused on its viability as a going concern, considering its liabilities exceeded its assets to the tune of R44bn, procurement and contract management, expenditure management and internal control measures. Questions posed to the RAF included how the RAF intended to stop fruitless and wasteful expenditure and why goods and services to the amount of R500, 000 had been acquired without the proper procurement processes being followed

Meeting report

The Chairperson welcomed all present to the hearing and requested that introductions be made. After introductions, he expressed the Committee’s displeasure at the absence of the Director General of the Road Traffic Infringement Agency (RTIA/the Agency) and the Board Chairperson.

Mr Jeremy Cronin, Deputy Minister of Transport, apologised for the absence of the Director General of Transport, Mr George Mahlalela, which he attributed to logistic issues. Mr Japh Chuwe, Registrar RTIA, apologised for the absence of the Board Chairperson, Ms Nomini Rapoo, whom he said was on an overseas trip.  Mr Christopher Mazini, a Board member and Acting Chairperson of the Audit Committee, would stand in for the Board Chairperson.

The Chairperson questioned Mr Mazini’s appointment as Acting Chairperson of the Audit Committee while he was a Board member. He said it was a strange and unadvisable arrangement. He also questioned why the majority of the management staff of the RTIA were in acting posts, rather than permanent appointments.

Hearing on Road Traffic Infringement Agency
Mr S Thobejane (ANC) commenced the hearing with a series of questions to the RTIA centred on revenue, trade and other receivables, and non-disclosure of irregular expenditure and budgets, based on its Annual Report 2010/2011(the Report).

Mr Thobejane asked the Deputy Minister why the agency had been set up in the first place, considering there were no proper structures on ground, no planning and even no budget for the agency.

Mr Cronin responded that the criticisms of the Committee had been noted.

Mr Thobejane said the best approach the Committee could take in the hearing was to consider the RTIA an unfunded mandate.

Mr Thobejane sought clarification from representatives of the RTIA on exactly when the agency had been scheduled.  The section on ‘Notes to the Financial Statement for the Period Ended 31 March 2011’ stated that the Agency was scheduled on 31 December 2011, whereas the ‘Registrar’s Statement’ alluded to the Agency being scheduled on 31 December 2010.

Mr Chuwe apologized for the error and clarified that the correct date on which the agency had been scheduled was 31 December 2010.

Mr Thobejane said the Auditor General’s (AG’s) statement in the report had observed that the RTIA had no systems of control over traffic revenue, hence it was unable to account for all that it had inherited from the Road Traffic Management Corporation (RTMC). Why were there no systems in place for these at the time the audit by the AG was taking place?

Mr Chuwe responded that all traffic infringement revenue was recorded in the National Contraventions Register, which had been developed as the model of the Electronic National Traffic Information System (eNaTIS). The RTIA was completely dependent on all records that originated outside its own environment and it took whatever the issuing authority had captured into the eNaTIS. Where these remained uncaptured beyond the 32 day period, it put the RTIA in a situation where it had to make the necessary follow ups. Static reports could not be relied on from the eNaTIS, as it was an online real time information-based system, so everything that was captured was automated as onetime data. Therefore when RTIA submitted its report to the AG, giving exactly the data that had been captured on the system, the auditors were unable to get verification of exactly the same details that were used. The RTIA did not have control over this as the eNaTIS system was live.

Mr Thobejane countered that it was obvious that the responsibilities of the RTIA had to be discharged by other related structures.  This, however, did not indemnify the agency from its own responsibilities, particularly the systems of control.  Its failure to have the proper systems in place had led to a failure to submit evidence of its finances to the auditor, hence it was in a disclaimer situation.

Mr Chuwe responded that this arose from the peculiar nature of the environment within which the RTIA operated, because it relied heavily on the information being uploaded to the eNaTIS, which was a live system. He conceded that the RTIA recognised it had not put all appropriate structures in place and should have had verifiable mechanisms which it could rely on.

Mr Thobejane asked what the RTIA had received as transfers from the RTMC.

Mr Chuwe responded that it had received records of all that the RTMC had performed on behalf of the RTIA. In this respect the RTIA had placed reliance on the legislative provision contained in Chapter 2 of AARTO (Administrative Adjudication of Road Traffic Offences Act) Regulations 2008 which stipulated that the administrative support functions would be performed by the RTMC, on behalf of the RTIA, relating to the capturing of notices, the processing of enforcement orders or support processes to be performed by the RTIA. These processes were what the RTIA took over from the RTMC.

Mr Thobejane asked if the RTIA was specifically stating that it could not provide the AG with the documents it required for its audit because of insufficient information received from the RTMC.

Mr Chuwe responded that the incompleteness of information and lack of control over the information did not stem from the RTMC only, because it was revenue that stemmed from all issuing authorities, including the RTMC.

The Chairperson pointedly asked Mr Chuwe if he meant the RTMC and other issuing authorities were responsible for the RTIA’s inability to provide the AG with information required.

Mr Chuwe responded in the affirmative.

Mr Thobejane asked the RTIA to explain exactly what had happened to the R292,8m pertaining to trade and other receivables, which the AG’s report had stated it had insufficient audit evidence to confirm completeness, valuation and existence.

Mr Chuwe deferred the question to the Finance Specialist Adviser.

Mr Bongani Nkasana, Finance Specialist Advisor, responded that the R292 million was not actual money which the RTIA had received. It was an accounting revenue, and therefore an amount owing to the RTIA, as it had not been collected. The R292, 8m was infringement tariffs which would only accrue to the RTIA after the 32 day period as per the AARTO Act. When the funds accrued to the RTIA they were then recognised as revenue, but physical cash was not received. It was more of an account receivable, hence no money actually went into the bank, but it was a paper entry with a debit and credit. 

Mr Thobejane countered that whether or not the money had actually been received was not the issue. The Agency had to give evidence of the receivable.

Mr Nkasana responded with a citation from the AG’s report which read ‘there were no systems of control over traffic infringement revenue sourced from the issuing authorities on which I could rely for purposes of my audit and there were no satisfactory audit procedures that I could perform to obtain reasonable assurance that all traffic infringement revenue was properly recorded.……’  He explained that the system of control -- the eNaTIS -- was where all information that amounted to the R292, 8m was retrieved. The AG could not confirm the amount on the eNaTIS system because data stored on the system was live data.

Mr Thobejane asked why this had not been properly explained to the AG during the audit.

Mr Nkasana responded that the AG could not perform the necessary verification procedures because the data had changed and there was no means to track the change.

Mr Thobejane asked again why these had not been disclosed to the auditors at the time of the audit.
The Chairperson suggested that the representatives from the AG’s office explain further.

Mr Marius Buys, Manager, Office of the Auditor General, explained that in terms of the audit of the R292,8m, there had been three assertions that were considered at the time of the audit:

           Completeness of the amount - the amounts did not agree even after reconciliation from all issuing authorities that were stakeholders to the eNaTIS system. Furthermore, as not all issuing authorities used the eNaTIS system, the data was incomplete. For instance, the Johannesburg Metro Police Department (JMPD) had a different in-house electronic system which it used and then later transferred data to the eNaTIS. Only nine months of data by the JMPD had been captured on the eNaTIS.

          Accuracy of the amount - the amount was not accurate as the auditors did not have data for the full financial year from all stakeholders.

          Validity of the amount - many infringement tickets issued may not have been valid, as the fines were not issued in compliance with the AARTO Act. Taking all these into consideration, the AG’s office could not make crystal clear assertions on the audit.

Mr Thobejane opined that it was clearly a case of the RTIA not providing the auditors with full information to show it had managed its finances well.  Mr Thobejane noted that from the AG’s report, the RTIA had not disclosed its irregular expenditure and the RTIA had violated all forms of procurement procedures. He asked why the procedures were easily violated.

Mr Chuwe explained that the total amount regarded as irregular expenditure as indicated in the Auditor General’s report amounted to R1.1 million. The RTIA had not disclosed it as irregular expenditure because in its opinion it was not.

The Chairperson interjected and asked if the RTIA was challenging the finding of the AG in this regard.   Mr Thobejane added that the RTIA had already clearly challenged this in the Registrar’s speech under Paragraph 1.10 of its 2010/11 annual report.

The Chairperson asked the RTIA to be specific on whether or not it was challenging the findings of the AG in this regard.

Mr Chuwe responded that the intention was not to impugn the integrity or independence of the AG  and he had sought only to justify why the RTIA did not believe its spending had been irregular.

The Chairperson wanted to know why the RTIA believed its spending was not irregular.

Mr Thobejane interjected with a direct quotation from the Registrar’s speech in the report, which stated ‘….we are confident that this expenditure was not irregular…’

The Chairperson stated that the statement was in fact a contestation of the findings of the AG.

Mr Chuwe stated that it was in this belief that the RTIA had acted, leading to its non-disclosure on the expenditure in question. However, the RTIA did not contest the findings of the AG, retracted the statement in its annual report that contested the AG’s findings and accepted the findings of the AG.
 
The Chairperson pointed out that the reasons given by the RTIA for why it thought the spending was not irregular and the findings of the AG were at par. Procedures were not followed in the procurement of goods and services.

Mr Thobejane raised issues regarding the RTIA budget, or non-availability of it. He asked why there had been no budget and estimates to guide the agency in its financial year.

Mr Cronin responded that both in the areas of irregular expenditure of the agency and inadequate budgeting, the Department had noted the issues raised and took full responsibility.

Mr Thobejane seemed dissatisfied and stated that the issue went beyond taking responsibility. The responsible officers had to be made accountable and it worried the Committee that the DG was absent.

The Chairperson agreed that the absence of the DG put the Committee on the spot, especially with regard to the lack of planning the RTIA was faced with, whom to hold accountable and what the consequences should be.

Dr D George (DA) questioned the RTIA on procurement and contract management, strategic planning and performance management, internal control and financial and performance management. He stated that the disclaimers from the RTIA felt surreal and the information from the agency was dubious, but nonetheless the hearing was an important process.

Dr George stated that the AG’s report had stated that the National Treasury (NT) requirements on procurement were ignored by the RTIA and asked why this had happened.

Mr Chuwe replied that at its inception, the RTIA did not have sufficient institutional capacity and based on the legislative provisions of Chapter 2 of the AARTO, the RTIA relied heavily on the RTMC to fill this gap.

The Chairperson interjected and asked if the RTMC should also have been called upon by the Committee.

Mr Chuwe responded that he was giving a background to what had happened.

The Chairperson insisted on a response and asked whether, because of the extent of the RTIA’s reliance on the RTMC, Mr Chuwe believed that the RTMC should also been called upon by the Committee.

Mr Chuwe responded in the affirmative.

Dr George asked who should be held accountable.

Mr Chuwe responded that the RTIA had mistakenly been working under the conviction that due processes had been covered. Based on this conviction, when it needed to procure services, it sent its requests to the RTMC and had assumed the RTMC’s existing contracts with service providers could cover RTIA’s orders. The RTIA, however, recognised that it was not exonerated as it had to ensure that its processes were properly covered.

The Chairperson sternly remarked that the RTIA seemed to always look for the easy way out of its responsibilities. The RTIA was a separate legal entity from the RTMC and it was baffling and unacceptable for the RTIA to suggest that contracts which the RTMC had with its service providers would extend to the RTIA.

Dr George stated that he agreed with the Chairperson’s view on the issue and asked which officer in particular of the RTIA was to be held responsible and what remedial action steps had been taken.

Mr Chuwe stated that the Chief Financial Officer (CFO), and ultimately of the Accounting Officer of the RTIA, were responsible.

Dr George asked if the RTIA now had a procurement compliance policy in place.

Mr Chuwe answered in the affirmative.

Dr George said the AG’s report had noted that the RTIA had not submitted its strategic plan to the executive authority at least six months before the start of the financial year, in contravention of the requirements of the NT.

Mr Chuwe explained that it was physically impossible for the RTIA to have met the six months deadline for the submission of its strategic plan, given the fact that the Registrar of the RTIA was appointed in March of 2010, by which time the six months deadline had elapsed.  However, a business case had been developed which contained a strategic plan, proposed budget, proposed organisational structure, motivation of the role to be played by the agency that gave rise to the need for its establishment as well as its future sustainability. The success of the business case was what led to the agency being scheduled in the Public Finance Management Act.

Dr George opined that from the AG’s report, it was obvious the internal control mechanisms of the RTIA had failed.

Dr George noted that the Audit Committee’s report had requested management to develop an action plan. He asked what the status of the action plan was and if it was available for the Committee to review

Mr Chuwe responded that the action plan had been developed and was available for the Committee.

Dr George referred to the AG’s report on financial and performance management and stated that management had failed to perform most of its duties and yet was still paid. He questioned what the allowances for the Registrar, as indicated in the ‘Notes to the Financial Statements’ of the report, were comprised of.

Mr Chuwe responded that the allowances were the restructured portion of Registrars’ package, including medical aid, pension fund etc and he emphasized that no bonuses were paid for the financial year under review.

Dr George referred to previous discussion on trade and receivables and the amount stated in the financials which, in his opinion, was misleading as the AG could not even verify its validity. Based on this, he asked if the RTIA was a viable concern in the real sense.

Mr Nkasana responded that it was right to say that the amount was unrealistic. In response to the agency being a going concern, he stated that the reason for the RTIA’s existence was to collect the infringement tariffs and the RTIA under normal circumstances should give its users a crystal clear picture of its finances. At the moment all the RTIA could provide were the receivables.  However, going forward, a more user friendly disclosure was envisaged, with a better accounting policy which showed how much had been received against the receivables etc.  The current financial year already had a more valid amount on its revenue base. He confirmed that without the assistance of the Department in form of the budget, the agency was not a viable concern and in the year under review there had been no budgetary allocation to the RTIA.

The Chairperson questioned the wisdom of the Department setting up an agency without proper planning.

Dr George asked if any officer of the RTIA had an idea of a realistic figure for the financial statements.

Mr Nkasana replied that no real data could be produced at the moment because the annual report under consideration was for the first year of operations and there was a need to have previous data to help with an understanding of the pattern of infringement.

The Chairperson invited Members to further probe the RTIA.

Ms T Chiloane (ANC) asked what the progress was on controls in terms of the supply chain management.

Mr Chuwe responded that tremendous progress had been made, starting with the required financial policies which needed to be developed.   They had been developed, approved and were now being implemented. The RTMC no longer conducted any procurement duties on its behalf and the RTIA was taking full responsibility.

Ms M Mangena (ANC) asked whether eNaTIS was in effect countrywide, or just in specific municipalities.

Mr Chuwe responded that the eNaTIS was applicable throughout the country and all issuing authorities were able to feed into it countrywide.

Ms Mangena said that representatives of the AG had stated that the JMPD had an alternative system which it used outside the eNaTIS.

Mr Chuwe responded that although the JMPD used a different electronic system, it still uploaded the data to the eNaTIS system, although not consistently. The loophole which the JMPD had taken advantage of to develop its own system existed in Regulation 19 (1) and (2) of the AARTO Regulation which gave room for use of other electronic file updates to capture traffic contraventions. The intention was that all municipalities used the eNaTIS.

The Chairperson questioned how the JMPD procured its own systems, different from other municipalities.

Mr M Steele (DA) questioned how it was possible that the Audit Committee had met and made recommendations, considering that the figures on which recommendations were being made were not a true reflection of the RTIA’s financials.

Mr Christopher Manzini, Acting Chairperson of the Audit Committee, responded that in terms of the figures, the Audit Committee in its report did not agree with the findings of the accounting officers and made its recommendations in its report.

Mr Steele asked what recommendations were made by the Audit Committee.

Mr Manzini responded that in terms of the figures given, the Audit Committee had stated that the whole question of the accounting basis did not give a correct picture of the financial position of the agency.

Mr R Ainslie (ANC) addressed his question to the Deputy Minister. He stated that from information at the Transport Committee, the Department of Transport had stated that at best only 60% of traffic infringement funds were actually recoverable due to several factors, which included the feeding in of wrong or incorrect data into the system. He questioned if the RTIA would ever be financially viable as it seemed government had created an entity that would never be financially viable and if not, why did it exist?

Mr Cronin stated that the agency was a creation of Parliament and not the Department. It was set up by legislation in 1998 and did not come into existence until 2010. He pointed out that the legislation creating the agency, and the reality of the agency itself, were extremely challenging. There were about 270 issuing authorities across all municipalities, and many of the municipalities which were cash-strapped generated their resources through fines.  The municipalities were therefore reluctant to submit the resources generated from traffic infringements. The problems with the agency were therefore mainly systemic problems, but despite this, it could be established as a going concern, although at a much more impaired figure than what was reflected in the annual report.

The Chairperson stated that his major concern focused on corporate governance issues in the RTIA and it needed to be followed up beyond the hearing. The Audit Committee comprised of board members and the management, yet the Audit Committee was to be responsible for advising the board. The Registrar and CFO, whose roles and duties were to be monitored by the Audit Committee, were members of the Audit Committee. This had not assisted in developing a committee that could advise the management of the agency objectively.

Mr Cronin thanked the Committee for the hearing as it had helped the Department to focus on the specific issues within its agencies. Points raised by the Committee had been noted. However, there was a need to consider and address the systemic issues which affected the Department and its agencies also.

Hearing on Road Accident Fund
The hearing started with introductory remarks from the Chairperson. On behalf of the Committee, he commended the Road Accident Fund (RAF) on its unqualified audit opinion from the AG and stated that it marked a vast improvement from its previous report.

Ms Mangena questioned representatives of the RAF on its viability as a going concern, procurement and contract management, expenditure management and internal control measures.
She asked for an explanation from RAF representatives on the weak internal control systems.

Dr Ntuthko Bhengu, the Chairperson of the RAF Board, responded that the RAF did in fact have internal control measures and even followed the recommendations of King 3.

The Chairperson asked why there were deficiencies in the internal control system.

Dr Bhengu responded that the internal control systems were largely effective, although some deficiencies existed.

Mr Mandla Mvelase, Acting CEO, explained that the organizational complexities and size of the RAF led to a few challenges, most of which were systemic even though there were contributory factors from the organization itself.  Also the Act governing the RAF did not assist it in settling its claims within the stipulated 120days and this gave rise to fruitless expenditure.  However, there was a need for the right systems to be in place.

Ms Mangena asked how the RAF intended to stop fruitless and wasteful expenditure.

Mr Mvelase responded that in most instances claims were settled and the system was generally manual, which complicated things. Staff members had been disciplined through writs that had been served as a result of their negligence.

Ms Mangena stated that a manual system could be manipulated, and asked what the RAF was doing to address this.

Mr Mvelase responded that the RAF had recently developed an integrated litigation system which had been computerised, as there had been an increase in the number of litigated cases.

Mr Andre Gernandt, the Chief Operating Officer (COO), added that all regional offices had centralized payment systems, where they followed up on capital payments on a daily basis, and this had largely reduced the risk factors. Unfortunately the legal costs of writs were still a challenge for the RAF. A computerised system was being developed to deal specifically with litigation cycles and hopefully it would take effect within a couple of months.  In the meantime, other manual control systems had been introduced.

Ms Mangena asked if funds had been recovered from the staff who had been disciplined and if not, how the RAF intended to recover the funds.

Dr Bhengu replied that the disciplined staff  had been disciplined on issues related to work commitments and negligence, and not necessarily fraud.
 
The Chairperson asked what form the discipline had taken.

Mr Mvelase responded that the disciplinary cases were related to staff negligence and in terms of internal systems, there had been no monies recovered from the staff as none of the staff had been enriched. The discipline meted out was equal to the misconduct of the staff.

Ms Lesibana Fosu, Chief Financial Officer, added that the disciplinary cases were not related to staff being illegally enriched. They arose from staffs’ negligence which had led to the RAF having to pay sheriffs for the service of writs, and interest on late settlements.

Ms Mangena said that the RAF had lost funds due to the negligence of its staff and hence they should be held accountable.

Ms Fosu responded that all staff signed performance agreements at the beginning of the year and the staff in question would lose their performance bonuses at the end of the year.

The Chairperson stated that the loss of performance bonuses still did not suffice for the financial loss which the RAF had suffered.

Ms Mangena asked why goods and services to the tune of R500, 000 had been acquired without the proper procurement process being followed.

Mr Mvelase explained that improper planning, which had led to emergencies, had been responsible.
Ms Mangena probed further and asked which officers were involved in the no- compliance, what disciplinary measures had been taken against such officers and whether there had been a probe to confirm that the officers were not shareholders in the companies that benefited.

Ms Fosu responded that a probe had been carried out and there was no evidence to suggest that any of the officials were shareholders in the companies that had benefited. She shed more light on the circumstances that gave rise to the lack of planning. She explained that the RAF had been in occupation of a part of building in Pretoria and was give a 30-day notice to vacate by the owner, who wanted to lease the whole building to a single party. Expenses had been incurred to ensure that in the circumstances, services were still rendered and this had given rise to the wasteful expenditure.

The Chairperson questioned whether there was a contract that guided the lease.

Ms Fosu responded in the affirmative and stated that the contract provided for a 30-day quit notice.

The Chairperson was concerned that the RAF had entered into a contract that could naturally give rise to an emergency situation such as the one in which it had found itself.

Mr Thobejane added that it was gross negligence for the RAF to enter into such contract and the officer who signed the contract should be held responsible.

Ms Mangena stated although the notice was for only 30 days, the RAF could still have adhered to proper procurement processes, as the requirement for publishing adverts was only 21 days.

The Chairperson asked which officer signed the lease.

Mr Mvelase responded that the lease was about eight years old and would have been signed by the Chief Executive Officer at the time.

Ms Mangena raised concern about RAF’s liabilities, which exceeded its assets by about R44 billion. She stated that RAF had been faced with the issue of its overbearing liabilities for years and asked if the RAF was a viable going concern.

Mr Bhengu responded that the liabilities had accrued over a period of 30 years and that the RAF had engaged with National Treasury over time and had submitted a reworked funding model to it. Although RAF was yet to secure the necessary funds to eliminate its deficit, it continued to hold discussions with the Treasury.

Ms Mangena enquired on the status of making payments directly to beneficiaries.

Mr Bhengu responded that there was massive campaign to ensure that the public was aware that victims could claim directly from the RAF. Some regions had already recorded a 100% increase in the number of direct claims.

The Chairperson invited follow up questions from Members to the RAF.

Ms Chiloane questioned whether the RAF carried out estimates in terms of claims and in terms of whether it was a going concern in relation to its R44bn deficit.

Mr Mvelase responded that the RAF was funded on a ‘pay as you go’ basis, which meant that claims from past years, before the establishment of the RFA, were being paid for.   This was unbeneficial and unsustainable.

Ms Marissa Moore, Chief Director, National Treasury, added that the underlying problem was not a question of the fuel levy as the primary source of income for the RAF not matching its expenditure, but the system itself.  This was unrealistic and the RAF could not even pay up to half of claims made. There was a need for a continuous drive to minimize costs and to find sustainable solutions to match the expenditure of the RAF with its income.

Mr Thobejane asked representatives of the RAF to provide the Committee with copies of the both the contract it had with the landlord in Pretoria and the 30-days quit notice given to it by the landlord.

Mr Mvelase assured the Committee that they would be sent immediately.

Mr Cronin stated that it was important to look at the past and learn lessons so that mistakes within the RAF were corrected. The mandate of the RAF remained pointless if they did not address issues of being a going concern. The issue was that the mandate and business models did not match and the solution was to move to a no-fault system. He thanked the Committee for its usual vigilance.

The Chairperson thanked all in attendance.

The meeting was adjourned.

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