Road Accident Fund 2023/24 Audit Outcome hearing; with Deputy Minister of Transport

Meeting report

Chairperson's introductory comments

The Chairperson welcomed all members of the Committee, the Deputy Minister, and the leadership of the Road Accident Fund (RAF), as well as colleagues from the Office of the Auditor-General (AG), the Special Investigating Unit (SIU), and Parliament. He thanked everyone for attending the meeting, emphasising the importance of discussing the RAF alongside the Department of Transport (DoT).

The Chairperson expressed gratitude to the United Democratic Movement (UDM) and the RAF team for quickly turning around the presentation document, acknowledging that this allowed for a more focused discussion. He appreciated the Members' opportunity to review the document, encouraging them to extract the key points from it. The meeting would be structured to ensure efficiency, recognising that the Members had already gone through the content.

The Chairperson pointed out that while the discussion would cover several issues, including the ongoing litigation between the Auditor-General and the RAF, it was not intended to duplicate previous discussions. He emphasised that the matter was in court, and the Committee would await the court's decision. He added that recording the disagreement between the AG and the RAF regarding accounting standards and audit outcomes was important.

He also addressed the issue of the budget, noting the Finance Minister's announcement that there would be no increase to the RAF levy, which, while welcomed by motorists, posed challenges for RAF management due to the reduced funding. He acknowledged these challenges, but reassured the RAF that the Committee was mindful of these realities. He stressed the importance of working together to achieve outcomes that benefit the South African public.

Mr Mkhuleko Hlengwa, Deputy Minister of Transport, extended his appreciation to the Ministry and the RAF for the opportunity to report on RAF-related matters and follow up on issues discussed in the previous meeting. He invited the Chairperson of the RAF Board to introduce herself and the other members of the RAF delegation. He also mentioned that while there had been some changes to the presentation, these were not significant and would not materially alter the content the Members had already received.

Ms Zanele Francois, Chairperson of the RAF Board, greeted the Chairperson of SCOPA, the Deputy Minister, and introduced the members of the RAF delegation:

Mr Collins Letsoalo, Chief Executive Officer of RAF, and the executive team

Dr Nomonde Mabuya-Moloele, Deputy Chairperson

Mr Lekau Moses Nyama, Chair of the Audit Committee

Ms Bernice Potgieter, Chief Financial Officer

Mr Phathutshedzo Lukhwareni, Chief Strategy and Transformation Officer

Ms Mampe Kumalo, Chief Governance Officer

Ms Mpho Manyasha, Acting Corporate Support Executive

Mr Radikwena Daniel Phora, Chief Internal Auditor

Ms Mokete Penane, Board Secretary

Ms Francois thanked everyone for their attention, and indicated that the RAF delegation was ready to begin the presentation.

RAF audit outcome hearing

Overview

Deputy Minister Hlengwa began by acknowledging the financial constraints affecting the country, which had impacted various sectors, including the Road Accident Fund (RAF). He emphasised that the RAF was not a money-making entity, and provided an update on the matters previously raised with the Committee. He expressed appreciation for the opportunity to address the Committee, and handed over to the chairperson of the RAF board and the executive team to present the key points from their presentation.

The Chairperson, in turn, sought clarification on two specific matters. Firstly, he asked the Deputy Minister to explain the reasoning behind withdrawing the RAF Amendment Bill and replacing it with a different amendment, as he wanted a clear understanding of the problem being addressed. Secondly, he asked the Deputy Minister to provide insight into the issue between the RAF and the South African Revenue Service (SARS).

Deputy Minister Hlengwa responded that the RAF Amendment Bill had gone through legislative processes in Parliament previously, and the goal of the new amendment was to ensure the long-term sustainability and viability of the Fund. He acknowledged that RAF’s current form was not financially sustainable, particularly due to lump sum payments to claimants. One of the main issues the new legislation sought to address was the manner in which benefits were paid out, proposing that the benefits were not legislated in monetary terms but rather reviewed based on economic factors such as inflation. He also highlighted the implications of the National Health Insurance (NHI) law, which would need to be leveraged to support the RAF’s operations.

The Deputy Minister further raised concerns regarding the role of lawyers in the RAF system, emphasising the importance of transparency, responsibility and accountability in maintaining ethical standards within the sector. He reiterated that the RAF was not intended to be a profit-generating entity for claimants, lawyers, or the fund itself. He also pointed out the broader issue of road safety, noting that high accident rates, such as the 1 502 deaths during the 42-day festive season, contributed significantly to the financial strain on the RAF.

On the issue between SARS and the RAF, he explained that SARS had billed the RAF for a rebate amounting to R5.2 billion that was due to a user under the Customs and Excise Duties Act. The RAF had secured an interim court order preventing SARS from collecting the first tranche of this payment, and the matter was expected to be resolved by the end of the month with a final court order.

(The video link malfunctioned for 13 minutes -- timestamp 25:20- 38:16)

The Chairperson then clarified the situation for the public, asking if his understanding was correct. He explained that when consumers paid for petrol or diesel, part of the charge went to the RAF, but certain operators, entitled to a rebate, may claim this amount from SARS. SARS, in turn, had agreed to a rebate and now sought to reclaim this from the RAF, which had disagreed with the claim, leading to the ongoing dispute.

Mr Collins Letsoalo, CEO of the RAF, elaborated further on the dispute, explaining that the issue stemmed from how the Customs and Excise Duties Act was administered. He said SARS had not provided the required audited certificates for the rebate payments over the past seven years, which had led to the billing of R5.1 billion, which the RAF disputed. He also confirmed that the RAF had secured an interdict preventing SARS from deducting the money until the matter was resolved.

The Chairperson, wanting to ensure public clarity, restated the situation, outlining the process whereby part of the fuel levy was transferred to the RAF and the ongoing conflict regarding the rebate. He noted that tax-related matters were often sensitive and confidential, but emphasised that the purpose of the discussion was to help the public understand the situation.

He said the dispute between the RAF and the SARS revolved around a rebate issue. He clarified that SARS had settled with another entity, which was impacting the RAF’s funding. SARS was now claiming that they should deduct a rebate amount from the RAF’s funds -- approximately R5.1 billion -- which they intended to pay in two tranches of R2.5 billion and R2.6 billion. The RAF disagreed, asserting that the legislation governing the rebate had not been followed properly, particularly regarding audit certificates, and that the rebate was not due to the entity in question.

The Chairperson asked for clarification on whether the RAF was contesting the deduction, or the process through which SARS arrived at the settlement.

Mr Letsoalo responded by emphasising that the RAF believed the rebate should not be deducted from their funds because the procedures outlined in the Customs and Excise Act (CEA) had not been followed. The RAF was not contesting the payment, but the process, which should have included audited certificates and adherence to legislation. He reiterated that they were not part of the settlement agreement between SARS and the other entity, and as such, they should not bear the financial consequences.

The Chairperson summarised the matter, confirming that the RAF’s concern was not with the payment itself but with how the decision had been reached and whether the correct procedures were followed.

Deputy Minister Hlengwa then provided further clarity. He confirmed that an interim court order had been granted to prevent SARS from collecting the disputed amount from the RAF. A final ruling on the matter was expected by the end of the month, and added that the complexities of the case meant it was best left to the courts to decide. He assured the Committee that once the matter was resolved, they would provide an update in writing to inform the Committee of the outcome.

The Chairperson acknowledged the significance of the case, noting that the amount in question was more than 10% of the RAF’s total funding. Given its material impact on the Fund’s finances, he emphasised the importance of resolving the issue.

Ms Francois expressed concern over the lack of a fuel levy increase for five years, which had severely impacted the RAF’s funding. She also raised the alarm about withdrawing the Road Accident Fund Amendment Bill, which had been critical for the RAF’s long-term sustainability. She indicated that the board would need time to reassess its strategy and funding model in light of this development, and hoped for further engagement with National Treasury to explore alternative funding options. She then handed over to the CEO to present more details.

Mr Letsoalo acknowledged the challenges of covering all the material in the presentation due to time constraints but agreed to highlight the key points.

The Chairperson assured the Committee that additional opportunities for further explanation would be provided as Members raised questions during the session.

RAF briefing on claims backlog

The RAF presentation provided the Committee with the following information:

• It was not accurate that the target was unmet by 50%. The annual target was to reduce the three-year-old claims backlog by 20%, and the actual achievement was 16.9%, resulting in the target not being achieved by 3.1%.
• An audit conducted into the backlog in the 2022/23 financial year had found that 92.3% of the backlog claims did not have adequate supporting documentation to enable the RAF to investigate and finalise these claims.
• The main root causes were inefficient lodgement processes which failed to provide proper measures to ensure registration of valid claims, and bad strategic choices that focused on aggressively seeking lodgement of claims without adequate measures to ensure the necessary minimum information required to enable investigation and settlement of the claims.

The steps the RAF was taking to address the backlog of three-year-old claims were:

• The introduction and enforcement of minimum requirements for claims lodgement introduced from July 2021 had assisted in improving the quality of new claims lodgement, thereby preventing a build-up of the backlog.
• The RAF had launched a media backlog campaign, which was aimed at urging claimants with claims older than three years to submit outstanding documents.
• Phase 2 of the backlog campaign was launched in February, prioritising outbound calling through the contact centre to identify claimants.
• To date, 3 002 claimants had been contacted, with 6 022 call attempts made contributing to efforts to accelerate settlements.
• Continuous analysis of old claims was in progress to identify dormant claims and determine the available legal recourse for inactive claims where no correspondence had been received from plaintiff attorneys.

To reduce claims which were litigated in court, the RAF had implemented the following

initiatives:

• The block settlement of litigated (with summons issued and set-down date) and non-litigated (without summons issued) settlement-ready matters.
• The RAF also prioritised the settlement of passenger and minor (0-7 years) claims, because their merits were generally straightforward, requiring minimal investigation. By expediting these claims, the RAF reduced the backlog, improved turnaround times, and ensured that claimants received compensation without unnecessary delays.
• The above was undertaken in conjunction with the early receipt of court rolls -- as far as a year in advance -- for litigated matters to be settled far earlier, obviating the need for litigation on matters without any genuine disputes.
• The RAF was currently participating in the sittings of the Mediation Implementation Committee, an initiative of the Judiciary of the Gauteng Division, and formed part of the Gauteng High Court's mediation project. The Committee was constituted to optimise the use of court-annexed mediation as a form of alternative dispute resolution (ADR) in the divisions of the High Court, and was currently at the stage where protocols were being crafted and developed for considered usage. A court directive herein was anticipated by the end of the first High Court term. In essence, the directive was likely to confirm that all RAF trial matters in the two divisions would be removed from the trial roll, and a new date would be provided only upon proof that the matter had been mediated.
• It was also important to note that the RAF had increased the settlement of claims by agreement, as opposed to settlement in the courts, from 58.5% in the 2015/16 FY to 81.9% in the 2023/24 FY.

Steps taken to combat claims system abuse, financial controls and governance:

• Governance structures had been put in place to quality assure any claim ahead of payment.
• Processes include validating the claimant’s details (identity document, mortality, etc) and checking if the representing legal entity was still recognised as an actively practising attorney by the Legal Practice Council (LPC).
• If an attorney did not meet the quality assurance standards, they were blocked, and investigation processes were engaged.
• With the implementation of the intelligent Customer Services Centre, claimants were encouraged to contact the RAF directly to find out the status of their claims.
• Currently, there were 4 031 claims that were blocked for various reasons. Some of these claims were awaiting the submission of documentation in line with quality assurance processes, while others were being investigated by the RAF's internal forensic unit and the South African Police Service (SAPS).

Steps taken to combat claims system abuse, fraud detection and investigation:

• The RAF had received 1 820 claims from 1 April 2024 to date, and had investigated 1 915 matters, of which 347 had been carried over from the previous financial year.
• 338 claims had been confirmed fraudulent from the investigations.
• A total of 39 claims from the 338 were fraudulent claims submitted by law firms amounting to R42 477 917.

Steps taken to combat claims system abuse, legal controls and governance:

• The RAF had referred 39 law firms to law enforcement agencies for criminal investigation in the current financial year.
• Over the years, the Fund has reported 112 cases of unethical conduct of law firms to the Legal Practice Council.
• There were 15 law firms where a criminal investigation had been finalised, and the matters were on the court roll.
• From the above 15 law firms, the money defrauded from the claimants amounted to R43 877 632, with a potential loss of R6 180 000. The trials were ongoing.

See attached for the full presentation.

Discussion

Mr G Skosana (ANC) noted that the RAF had maintained an adverse audit opinion in 2023/24, continuing from the previous year. He acknowledged the organisation's stated reason -- its use of the International Public Sector Accounting Standards (IPSAS) 24 accounting standard -- and asked whether the RAF was prepared to continue receiving adverse or disclaimer audit opinions for as long as the legal process continued, regardless of its duration.

He further questioned the reported R1.5 billion deficit for 2023/24 and the accumulated deficit of R25.5 billion, alongside the fact that liabilities exceeded assets, raising concerns about solvency and the RAF’s ability to fulfil its mandate. He asked whether the primary cause of the ongoing deficit was the fuel levy and/or the current legislation governing the RAF’s funding model.

Referring to the AG's findings, Mr Skosana highlighted issues with oversight, financial reporting, and compliance with internal controls. He asked for the RAF's response to these concerns.

Regarding performance, he acknowledged the reported 85% achievement against annual targets, but asked why there had been a decline from 91% the previous year. He also questioned the low 20% target set for addressing the three-year-old backlog of claims, arguing that this would effectively result in claimants potentially waiting eight years for resolution. He asked why such a low target had been set, and how the RAF planned to address documentation issues that hindered target achievement.

He also inquired about irregular expenditure -- specifically, what disciplinary actions had been taken and when all outstanding determination processes would be concluded to ensure effective consequence management. Lastly, he raised concerns about vacant executive management positions, asking how long they had remained unfilled and how this had impacted operations and claims processing efficiency.

Mr Letsoalo responded that no one took satisfaction in receiving an adverse or disclaimer audit opinion, particularly finance professionals like himself. However, he emphasised the organisation's duty to apply professional judgment in financial reporting, even if it meant disagreeing with the Auditor-General. He indicated the RAF had not anticipated the litigation process taking this long, but remained firm in believing their approach was correct. If they were to abandon this approach, he argued, it would lead to a failure to table financials in Parliament, which would be worse than receiving an adverse opinion.

Regarding the accumulated deficit, he explained that the RAF’s revenue in nominal terms had remained static at R2.18 per litre for several years, while inflation -- particularly medical inflation --had continued to rise. This mismatch meant the RAF’s real income was declining. Since accidents continued to occur, liabilities would naturally keep increasing, creating a sustained solvency challenge. He added that the RAF had never been a sustainable system from the start, noting it had been bankrupted by 1948 and had undergone multiple commissions of inquiry.

He argued that the fundamental problem was the lump sum payout model, which no other social benefit scheme followed. In his view, paying claimants annuities instead of lump sums could significantly improve the RAF’s long-term sustainability. He added that many lump sum payments were squandered within a year.

On the issue of oversight and financial compliance, Mr Letsoalo maintained that the concerns related primarily to the RAF’s position on accounting treatment, not broader issues. In other areas, he claimed the RAF was managing effectively.

Regarding performance, Mr Letsoalo attributed the drop in target achievement to the delay in implementing Project Bokamoso, an integrated claims management system. The project was meant to have been launched in the relevant year, but had had to be postponed. He disagreed with Mr Skosana’s view that the 20% backlog clearance target was too low. Previous administrations had much longer timelines, sometimes finalising claims over 1 200 days. The RAF had now set a target of 120 days for claim finalisation, and was also working through existing backlogs, prioritising the oldest claims, including those for children. He added that claims qualifying as three years old were a moving target due to annual changes.

Addressing documentation challenges, he said the RAF had faced legal resistance when requesting complete information through its RAF Form 1. He alleged that some lawyers took the RAF to court rather than cooperating, driven by their own financial interests. He also questioned the legitimacy of many claims, suggesting that doctors and lawyers sometimes exaggerated injuries and that even individuals who claimed lifelong disability were later found to be employed. Furthermore, he highlighted the inequity of a social benefit scheme paying more to wealthy individuals than the poor, a flaw the Amendment Act aimed to address.

On irregular expenditure, he said the RAF followed National Treasury guidelines by conducting investigations and enforcing progressive disciplinary action. He emphasised the need to distinguish between mistakes made by active staff and intentional non-compliance, noting that employees involved faced consequences, such as written warnings.

Regarding executive vacancies, Mr Letsoalo acknowledged that the unfilled posts, particularly in operations, had negatively affected the RAF. He explained that the organisation had advertised the posts three times without success, partly due to the highly specialised skills required and the negative public perception of the RAF. He noted that some vacancies had been created following structural changes, and had remained unfilled for about two years.

Ms Francois added that the RAF Board had thoroughly considered the matter of the audit opinion. It had conducted research and concluded that applying the current accounting standard led to a liability that was not real, thereby misrepresenting RAF’s financial position. She emphasised that it was not in the organisation’s best interest to continue with such a standard, and that the matter currently before the courts would benefit from independent adjudication. She supported the executive’s decision to challenge the standard, stressing the need to safeguard the RAF’s long-term sustainability.

Following up, Mr Skosana asked whether there had been any developments in the litigation process between the RAF and the Auditor-General since their last engagement.

Mr Letsoalo responded that the RAF had received correspondence from the executive authority urging them to seek a resolution. As a result, it had engaged with the Accounting Standards Board (ASB), the Auditor-General, and National Treasury. However, on the court's side, there had been no movement, and the RAF was still awaiting the President’s decision. He invited the Chair of the Audit Committee to elaborate.

Mr Lekau Nyama, Chairperson of the RAF audit committee, confirmed that they had received guidance from the Department regarding the RAF’s accounting policy. The committee had since written to both the ASB and the Auditor-General of South Africa (AGSA), and was in the process of consolidating the feedback into a proposal to be presented to the board for a decision. He emphasised that the audit committee was not satisfied with the repeated adverse audit outcomes, and was committed to finding a technical solution to resolve the dispute without ongoing conflict between the RAF and the Auditor-General.

The Chairperson opened the discussion by thanking the Deputy Minister, and inviting him to speak.

Deputy Minister Hlengwa said that although the matter was being debated, it was important to reiterate the Department's stance for the record. He emphasised that the Department did not support the ongoing litigation involving the RAF and the AGSA. He reminded the Committee that this position had already been made clear.

Their position remained that the matter should be resolved outside of the courts. This process should include engagement with the ASB, among other measures. He recalled that during the last meeting, the RAF had reported that the ASB was in the process of developing an applicable accounting standard. In light of this, the Ministry believed this approach should have been maintained.

He expressed concern that the matter had remained in court for a long time, and that the RAF had not received favourable judgments in any instance. This ongoing litigation was a fundamental concern to the Ministry. It would be remiss of him not to present the Ministry’s view -- which he described as the other side of the coin -- that the issue should not be in court.

The Chairperson thanked the Deputy Minister and concluded the matter with an important anecdote. He explained that the Medium Term Budget Policy Statement (MTBPS) from the previous October had been adopted by Parliament, as had the 2024/2025 national budget. The current budget being tabled would also likely be adopted without dispute. There seemed to be no disagreement regarding National Treasury’s assessment of the RAF’s financial position.

He remarked that Parliament found itself in what he described as a “schizophrenic” or conflicting situation — where Parliament had adopted the RAF’s annual report, which appeared to contradict what Parliament had approved in the national budget. He stressed that this contradiction should not be taken lightly, as it undermines the institutional integrity of Parliament. He hoped the matter would be resolved quickly because Parliament had, in effect, adopted two opposed positions. He cautioned that if the matter went to court, a judge could argue that Parliament had failed in its oversight role. He clarified that the approved budget gave a specific figure that aligned with the Auditor-General’s findings, while the annual report and financial statements reflected a contradictory view.

He urged all parties to resolve the matter as soon as possible, stating that no one — including Parliament — was above the judgment of the courts. That was where he wished to close the matter.

Mr P Atkinson (DA) raised a legal query. He asked at what point the law could be considered to have changed, particularly in cases still before the courts. He noted that the Deputy Minister had earlier said that the law must be followed, and based on that, Mr Atkinson asserted that the law only changes once a court explicitly changes it. Therefore, he believed that the RAF, as a social insurance fund, was legally required to report as such, and was not permitted to report differently until the courts ruled otherwise.

He added that although the RAF had appealed previous unfavourable rulings, including a full bench judgment, the legal position remained unchanged until the Chief Justice ruled differently. He asked why the RAF was not complying with the existing legal framework, especially with the AGSA. Furthermore, he questioned the RAF board’s adherence to King IV principles, suggesting that the board’s actions might enable conduct that could be viewed as delinquency, particularly because the RAF continued to receive disclaimers due to not following the law. He asked for clarity on when the RAF believed the law changed and whether his understanding was correct — that the law only changes through court decisions and must be followed until then.

Mr Letsoalo responded by referring to the Oudekraal principle. He explained that according to this legal doctrine, an administrative decision remained valid until it was reviewed and set aside by a court. The RAF board’s decision to implement an accounting policy change was such an administrative decision, and no court had set it aside.

He further cited the principle of functus officio, explaining that once an administrative decision was made, it could not be altered unless a court overturns it. He used the example of a mistaken appointment — explaining that the only remedy would be to go to court to set it aside, not to reverse it unilaterally.

Addressing the issue of court rulings, Mr Letsoalo mentioned Section 18(1) of the Superior Courts Act, which provides that when a court decision is appealed, it is automatically suspended until the appeal is resolved. He emphasised that the RAF had followed this legal process. He further explained that, under Section 34 of the Constitution, anyone had the right to approach a court to resolve disputes through the application of law, and that was precisely what the RAF had done. The RAF firmly believed they were operating within the bounds of the law.

Mr Atkinson responded by saying it was his understanding that the full bench of the High Court, or Supreme Court, had told the RAF to continue reporting as a social insurance fund. He acknowledged that the RAF had approached the Chief Justice in an attempt to overturn that decision, but maintained that until the court ruled otherwise, that remained the law.

In reply, Mr Letsoalo reiterated that once an appeal was filed in terms of Rule 18(1), the court decision was suspended and had no effect. He cited an earlier issue, where both he and the RAF board had been faced with a personal cost order. He explained that although the RAF had not paid, the Supreme Court of Appeal had later overturned the ruling. He stressed that once an appeal was in process, the decision being appealed was suspended.

Mr Atkinson then shifted to another concern — the documentation required for claims. He referred to a ruling by Acting Judge Kholong, who had reportedly said that the RAF could not reject claims based on the absence of documents such as proof of income. He expressed concern that valid claims were being rejected based on board-imposed requirements that lacked legal standing. He questioned the accuracy of the RAF’s reported liabilities, if those figures were based on claims being rejected for documentation that courts had said was not required.

Mr Letsoalo responded by saying the RAF would have to rely on the Auditor-General's opinion, even when they disagreed on some matters. He pointed out that while there were disagreements regarding the appropriate accounting standard, the RAF had not challenged the AG’s opinion on the liabilities. He acknowledged that the Eastern Cape High Court had issued judgments with which the RAF disagreed. He said that when the RAF believed a court decision was flawed, they would appeal it. He questioned how the RAF was expected to calculate loss of earnings without documentation such as proof of income, calling the expectation absurd. He confirmed that the RAF would appeal the judgment once it reached head office.

He also referred to another appeal pending at the Constitutional Court, relating to a decision that required the RAF to process claims without identity document (ID) numbers. He questioned how they were expected to verify claims without proper identification. He argued that the RAF had a duty to manage public funds responsibly, and that requiring proof was part of due diligence. He cited Section 4 of the RAF Act, which gives the Fund the authority to set terms and conditions for claim processing, including requiring documentation.

Mr Letsoalo concluded by stating that the RAF was not attempting to deprive rightful claimants of compensation, but had to ensure that claims were legitimate. He affirmed that the RAF would appeal judgments it disagreed with and, if higher courts ruled against them, they would comply and report back to the Committee.

Mr Atkinson then questioned the RAF’s investment income, which he noted had increased significantly to about R498 million. He estimated that this implied the RAF had R8 to R10 billion invested or on call during the year. He asked why the RAF had appointed a Chief Investment Officer (CIO) instead of a treasurer. He questioned what types of investments the RAF was making that required a CIO, suggesting that the RAF should only be keeping cash in call accounts to meet its liquidity needs.

Mr Letsoalo began by stating that the RAF had adopted a different approach to management, especially asset and liability management. He said that while Mr Atkinson might refer to a particular role as “treasurer,” the RAF referred to the same function as a “chief investment officer” (CIO). He argued that this was a matter of semantics and naming conventions. He said that some believed this position should report to the chief financial officer (CFO) due to its financial nature, but the RAF held a different view. For them, asset and liability management extended beyond traditional finance structures.

He further clarified that the role of the CIO had been introduced because the RAF anticipated moving towards a model where they would pay claims in instalments. This approach required strategic asset acquisition and management to match liabilities on the RAF's books. This necessitated having someone with financial market expertise, rather than a traditional accountant or finance person. He emphasised that when the RAF began, its liability book was in disarray, with payment timelines varying from 30 days to eight years. In response, it had implemented a process of liability stratification, a task typically handled by capital market professionals. He insisted that the introduction of the CIO was a management decision, and that such decisions might not always receive universal agreement. Nonetheless, he asserted that the decision was appropriate and had not resulted in any negative findings.

In response, Mr Atkinson asked what kind of assets the RAF considered purchasing, given Mr Letsoalo’s earlier statement about long-term liabilities.

The Chairperson interjected to seek clarity, and referred to a previous meeting where he had asked what types of investments RAF engaged in. According to his recollection, Mr Letsoalo had responded that the RAF had only a call account, and when asked if that was all, he had confirmed it. He also recalled asking whether the RAF had a treasurer, to which he believed Letsoalo had answered affirmatively. He expressed concern about possible contradictions in the information being provided. He asked whether the RAF had ever had both a treasurer and a CIO concurrently, and if not, at what point they had chosen to move away from having a treasurer. He also asked if the CIO was performing functions typically associated with a treasurer, and whether this was merely a matter of naming conventions.

Mr Letsoalo replied that he recalled the Chairperson's questions at the previous meeting, and had said then that they were entering management territory by discussing personnel structures. He stated firmly that the RAF had never had a treasurer. Instead, they had had an acting CIO, and he did not know where the term “treasurer” had originated from in this context. He reiterated that the CIO’s responsibilities extended beyond a call account, and involved asset and liability matching.

The Chairperson pressed for a clearer answer, stating that calling roles by incorrect titles was not appropriate, and that roles like CIO and treasurer had fundamentally different responsibilities. He emphasised that a CIO was responsible for driving investment strategies and maximising returns, whereas a treasurer was responsible for managing cash flow, matching assets and liabilities, and overseeing investments in line with obligations. He expressed concern that Mr Letsoalo’s current responses contradicted those previously provided to the Committee, and reminded him that consistency and truthfulness were essential.

Mr Letsoalo responded that he needed to be allowed to clarify his position, as he felt assumptions were being made about his statements. He argued that the CIO's job was not limited to maximising returns, and reiterated that the RAF had only a call account. When asked again if the RAF had any other investments beyond the call account, he asked what the Chairperson meant.

The Chairperson elaborated that he was referring to investing excess cash with the Reserve Bank or similar institutions, which was permitted under RAF’s legal framework. He recalled that Mr Letsoalo had previously stated that the RAF used only a call account, yet he had now mentioned additional functions like asset and liability matching and loan book stratification. He asked Mr Letsoalo to explain this apparent contradiction.

Mr Letsoalo clarified that while the RAF did have a call account, the CIO performed additional functions, including managing liabilities and asset matching. He emphasised that this did not equate to having a treasurer, and the RAF had never had one. He repeated that, depending on the institutional model adopted, a CIO and treasurer could have overlapped or had distinct functions, and that the CIO at the RAF performed several key tasks beyond overseeing the call account.

The Chairperson read from the Committee’s minutes of the previous meeting, which recorded that Mr Letsoalo had indicated that the CIO would be necessary when the RAF began making payments in instalments. At that time, the RAF was changing, and a submission was expected to explain the need for a CIO. The Chairperson stated that the previous meeting had revealed uncertainty about the CIO’s actual responsibilities, and insisted that today’s answers were inconsistent with the previous ones.

Mr Letsoalo disputed this, saying he had never claimed there was a treasurer. He stated again that there was an acting CIO, and emphasised that they were now venturing into management decisions, which had to be made internally. He noted that if the Committee’s view was that naming conventions could not be decided by management, and that the Committee could scrutinise internal job descriptions, a conflict would arise. He agreed to the Committee’s request to review the meeting record, and asserted that his answer remained unchanged: the RAF had a CIO, not a treasurer.

Deputy Minister Hlengwa intervened and suggested that to provide clarity, the Committee should be briefed on the roles and responsibilities of each executive member, particularly since the CIO role was vacant and under recruitment. He further proposed that the RAF should provide a detailed briefing on investment-related activities, given the material impact of such matters on the entity’s finances. He believed this would help the Committee understand the scope and structure of the RAF’s investment strategy.

The Chairperson acknowledged the Deputy Minister’s suggestion, and asked whether clarity would be provided during the current meeting.

The Deputy Minister replied that while the issue had been raised in the current meeting, RAF might need to return to provide a full briefing. He pointed out a slide in the presentation listing executive roles, and emphasised that understanding what each executive was doing -- including investment activities -- was crucial for effective oversight.

The Chairperson thanked the Deputy Minister, and reiterated the need for consistency. He emphasised that it was acceptable for things to evolve, but inconsistent explanations were not acceptable. He allowed Mr Atkinson to proceed.

Mr Atkinson asked why the CIO was not present at the meeting.

Mr Letsoalo clarified that the acting CIO, Mr Sefotle Modiba, was in attendance.

Ms Francois said she wanted to add to what the Deputy Minister had said. Since a certain position was still vacant and undergoing the recruitment process, she suggested that the recruitment be paused, pending the current discussion. She argued that a reconciliation between the job description and the actual role would need to occur, and this matter needed to be resolved first. She also apologised for previously omitting to introduce the Acting Chief Information Officer, who was present in the room.

Mr Atkinson thanked the speakers, and moved on to the issue of fruitless and wasteful expenditure. He noted that a large portion of this expenditure was related to the call centre, which did not follow proper procedures during the tendering process. According to the financial statements, procedures had not been followed to acquire the call centre services.

Mr Letsoalo responded that he was not aware of this, and insisted it was certainly not reflected in their report.

Mr Atkinson acknowledged Mr Letsoalo's response, and clarified that his understanding had been that this was listed under fruitless and wasteful expenditure. He then indicated that he had concluded his line of questioning.

The Chairperson thanked Mr Atkinson and raised a logistical point. He asked Members to note that the Deputy Minister had mentioned an important engagement, and that he had granted the DM the discretion to leave the meeting early.

Deputy Minister Hlengwa said that he could stay a while longer.

The Chairperson said that this was acceptable, but he wanted to ensure Members had the opportunity to direct questions to the Deputy Minister before his departure. He planned to open the floor for such questions so that the DM could leave on time.

Mr K Madlala (MKP) acknowledged that although there were contentious issues with the RAF, some of which were before the courts, the Committee had seen worse. He emphasised that attempts to correct issues should not be interpreted as a lack of appreciation for the work being done. In his view, the RAF was actively engaging in managing itself and bringing forward solutions, not just problems -- something the Committee welcomed. He said that Committee Members expected logical, strategic thinking from entities. He reiterated that while not all issues enjoyed the Committee’s support, the RAF did have their support in some matters.

His first question concerned the timelines for proposed legislative amendments. He stressed the importance of setting specific timelines so that accountability could be tracked and delays avoided. He asked for clarity on when the amendment bill would be submitted to the Committee.

His second concern related to inaccurate or incomplete claims applications, despite the presence of lawyers. He recalled raising this issue previously, and reiterated that the Committee was looking to transition to a model favouring direct claims by individuals. He asked about the strategy for simplifying this process and increasing public awareness to reduce inaccuracies and documentation gaps. In line with this, he asked if the increase in marketing costs was tied to public participation and awareness campaigns.

He then turned to an investigation by the SIU involving 102 law firms that had allegedly received duplicate payments totalling R340 million. He asked whether the full amount had been recovered, what had happened after the acknowledgements of debt were signed, whether arrests had been made, and whether these law firms had been publicly named.

He also asked about Project Siyenza, which was meant to address the claims backlog. He noted allegations that the contract had been awarded irregularly and questioned the procurement process and any deviations. He specifically asked why a service provider that was allocated 2 472 files had completed only 96, and whether there had been a follow-up appointment.

He raised a question about the procurement of an office building, estimated at R11 million, with an annual escalation of 6% over five years. He referred to the SIU's preliminary findings suggesting this may have overturned a decision by the Bid Adjudication Committee and violated legal prescripts. He inquired about the status of the investigation and whether any consequence management had been implemented. Finally, he asked about RAF employees implicated in wrongdoing and what steps had been taken to recover funds and hold those individuals accountable.

Mr Letsoalo expressed appreciation for Mr Madlala's acknowledgement of the RAF’s work, commenting that such recognition was rare and encouraging. He explained that the amendment bill had been withdrawn, but he could not provide further details, as policy and legislative matters fell under the executive authority.

Regarding application inaccuracies, he said that these were often by design rather than default. Some claimants deliberately submitted incomplete documentation to exploit Section 24.5, which allowed offers to be made even for technically incomplete claims. This had led to many claims being rejected.

On the subject of direct claims, Mr Letsoalo pointed to Section 19C, noting that under the current legal framework, it was almost impossible for ordinary individuals to file direct claims. If the RAF failed to act within 120 days, claimants had to issue a summons, which was complex and not feasible for unqualified persons. He explained that the forms themselves were technical, and the process discouraged ordinary people. He emphasised that the RAF wanted to move away from a system based on intellectual or legal complexity. Their goal was to adopt a SASSA-like model that would be user-friendly and include independent adjudication mechanisms for unresolved claims, eliminating the need for court proceedings.

On SIU-related matters, he deferred to the SIU for detailed responses, but mentioned that when the current leadership had arrived in 2019, there had already been a tender process underway for the procurement of a head office. A review at that time had shown that moving to a new building would cost around R120 million, including tenant installations and information technology (IT) infrastructure, which was unaffordable. As a result, the RAF had discontinued the process.

Mr Letsoalo said many unscrupulous law firms had been reported to the Legal Practice Council. He added that the RAF often helped claimants report these firms, though the LPC’s cooperation had been limited. He suggested that the Committee might consider calling the LPC to explain their processes, especially since, in some cases, they had defended law firms against efforts to have them struck off.

He confirmed a rise in marketing costs over the last two years. He explained that from 2019 to 2021, the RAF had been inward-focused, but from 2023, efforts to raise public awareness had been intensified. This included promoting the call centre and educating the public about their entitlements. He highlighted that many people were unaware they were entitled to party-and-party costs, which lawyers had historically claimed for themselves.

The Chairperson thanked Mr Letsoalo, and indicated that the question of the amendment bill timeline fell under the purview of the Deputy Minister, who would need to provide an official answer. He also permitted Mr Letsoalo to complete any outstanding points.

Mr Letsoalo returned briefly to the Siyenza Project, stating that the matter was under an SIU investigation. He explained that a previous administration had appointed a service provider to help settle claim files, but this contract had later been found to be unlawful. The AG had also identified issues with the contract, and the RAF was awaiting the final findings of the investigation to determine the next steps.

Deputy Minister Hlengwa confirmed that the decision to withdraw the Road Accident Fund (RAF) Amendment Bill had been taken a few days previously. The RAF had been informed of this decision, along with reintroducing the Road Accident Benefit Scheme (RABS) Bill. In his correspondence to the RAF, he had indicated that the fund would be allowed to make its submissions, and he was currently awaiting a response. He acknowledged the Chairperson’s earlier remarks, and anticipated that formal correspondence would follow in due course.

The Deputy Minister explained that once the RAF had properly considered the proposal on the table, a timeline would be developed. He clarified that this was not a new bill, and that substantial work had already been completed previously. However, he acknowledged that the operational environment for the RAF had changed significantly, and as such, new ideas and updated perspectives would need to be factored into the process. He anticipated that the RAF would seek legal consultation to evaluate the policy direction, and assured the Committee that a timeline would be provided in due course. He also confirmed that the bill would go through all statutory bodies, including the Cabinet, before being presented to the Portfolio Committee.

He also informed the Committee that in consultation with the Minister, the Leader of Government Business had also been advised about this legislative development. He committed to expediting the process, stressing that the challenges faced by the RAF required urgent attention. He emphasised that a formal board meeting had been scheduled to begin substantive engagement, and noted the importance of moving beyond written correspondence toward more direct dialogue.

In response, the Chairperson thanked the Deputy Minister and suggested that in the interest of saving time, he should provide the Committee with a written explanation detailing the reasons for the withdrawal of the bill. This memorandum would be shared with Committee Members to ensure they were adequately informed. He clarified that a detailed discussion or justification of the withdrawal was unnecessary at the current meeting.

Mr Madlala then asked a follow-up question. He addressed Mr Letsoalo, and sought confirmation that despite the absence of a fuel levy increase, the RAF was not requesting additional funds during the current financial year.

Mr Letsoalo confirmed this was correct.

Mr Madlala then turned to the Deputy Minister, requesting his opinion on a broader issue. He acknowledged the Deputy Minister’s comments on the reintroduction of the RABS Bill, but raised what he referred to as the "elephant in the room." He pointed to a public perception that a power struggle existed between the RAF and certain large, predominantly white-owned law firms, which were seen as major beneficiaries of the RAF system. He questioned whether these firms had profited more than the actual claimants, and suggested that some of the resistance to reform could be due to these vested interests. He noted that despite legal debates around the RAF’s compliance, he found many of the RAF’s submissions logical, particularly those regarding long-term structural reform aimed at ensuring that the real beneficiaries were the people on the ground. He asked whether the reintroduction of RABS would change anything in that context, and requested the Deputy Minister’s opinion on the long-term sustainability of the RAF.

Deputy Minister Hlengwa responded that this was a complex conversation that could easily take a full day to unpack. He reminded the Committee that the RAF was facing a serious funding challenge, and that the Department was exploring alternative revenue streams. He clarified that removing the RAF fuel levy at the pumps was not a viable option in the absence of a sustainable funding plan. He emphasised that reviewing the RAF’s funding model was a key priority.

He went on to say that he had suggested in earlier remarks that the Legal Practice Council be called to account before the Committee, given widespread concerns that money often failed to reach claimants. He described receiving constant correspondence from the public regarding cases where lawyers had retained funds meant for claimants. He stressed that addressing the role of lawyers was essential in any review.

He added that he had engaged with legal professionals directly, sometimes even interrupting other meetings to deal with issues in real time. He noted that the challenges extended beyond lawyers to include healthcare providers. This was why he continued to refer to the implications of the National Health Insurance (NHI) scheme.

The Deputy Minister emphasised that paying claimants lump sums was not financially sustainable for either the RAF or the recipients. He said that during the review, one of the key areas would be defining appropriate benefits. He acknowledged that both class and race dynamics were involved, pointing out the need to address disparities in compensation and valuation -- for example, the inconsistency of how injuries were assessed and valued. He reiterated that the RAF was not a profit-making scheme -- not for lawyers, healthcare professionals, or claimants. He said that in cases such as lottery winnings, recipients were often offered financial counselling, and he suggested that similar support might be necessary for RAF claimants to help them use their settlements responsibly.

He highlighted that many injuries had long-term medical implications, and it was often the RAF that had to manage these extended costs. He stressed that reform efforts should focus on ensuring that the rightful South African claimant receives the intended benefit. He criticised the current system, where people in the country illegally, could access full benefits despite not contributing to the tax base. He shared an example from a previous meeting, where it was revealed that some foreign nationals, including Americans and Belgian doctors, were submitting large claims calculated in foreign currencies. This had necessitated collaboration with the Department of Home Affairs to reassess visa and residency regulations to protect the sustainability of state benefits.

Lastly, he highlighted the need to examine broader challenges in the road sector, including the potential for transitioning freight transport from road to rail to reduce accidents.

He cited World Health Organisation (WHO) data indicating that South Africa had one of the highest rates of alcohol consumption globally. He asked at what point society would begin holding drivers and pedestrians accountable for the accidents they caused. He argued that being involved in an accident should not automatically qualify someone for RAF benefits if they behaved recklessly. In closing, he reiterated that while the legal fraternity was indeed a concern, the RAF’s problems were embedded in a complex ecosystem of systemic issues that required coordinated, multi-sectoral solutions.

The Chairperson observed that the RAF sat at the centre of many intersecting issues, which eventually manifested as claims. He expressed doubt that there could ever be a perfect model to resolve all these issues. He pointed out that most of the challenges -- from driver behaviour to alcohol consumption to multiple-occupant vehicle accidents -- fell within the Deputy Minister’s portfolio. He emphasised that expecting the RAF to resolve problems that originated elsewhere in society was not sustainable.

He also welcomed the Deputy Minister’s comments about addressing the question of non-South African claimants. Drawing a comparison, he said that in the UK, visitors were required to take out medical insurance and could not simply access public funds.

He agreed that the Legal Practice Council must be brought before the Committee, noting that professionals had both a legal and moral obligation to act in the interest of claimants.

Finally, he said the Committee needed to distinguish clearly between policy or legislative reform and funding challenges. While the public often celebrated announcements of no increases to the RAF levy, the consequence was that people later complained when there was no money to pay claims. He concluded by acknowledging the complex and stressful nature of the work facing the Deputy Minister and the RAF leadership, and expressed appreciation for their efforts.

Mr Atkinson revisited a point he had raised earlier regarding fruitless and wasteful expenditure. He pointed out that there was a specific instance of irregular expenditure under determination amounting to R68 million. He noted that it was described as resulting from an incorrect price variation conducted in contravention of Section 81 of the Preferential Procurement Policy Framework Act. He expressed interest in understanding the details of this expenditure.

In response, Mr Letsoalo speculated that the matter might be related to Siyenza, but he was not entirely certain and indicated that Ms Bernice Potgieter, the CFO, would be better placed to provide clarity.

The Deputy Minister interjected, requesting a temporary pause on the matter to manage time constraints, particularly given the limited time he had left in the meeting. He suggested that the CFO could return to the matter afterwards.

The Chairperson confirmed that the CEO’s earlier statement was consistent with information in the supporting documents. The Chairperson then directly asked the CFO whether the issue under discussion referred to Siyenza.

Ms Potgieter clarified that the Siyenza matter involved an amount closer to R400 million, and was therefore separate. The R68 million in irregular expenditure was a different matter identified during the audit process. This expenditure was still under determination, and would be reflected in the annual report once finalised. She added that to her knowledge, the specific nature of the expenditure had not yet been determined, but asked for a few minutes to investigate further and return to the matter later.

Mr Atkinson acknowledged the response and moved on to his final question. He asked for confirmation, for the record, that the call centre contract had followed proper supply chain processes and was fully compliant.

Mr Letsoalo replied that all processes had been subject to audit by the Auditor-General and confirmed that, as far as audits had gone, everything regarding the contract was above board.

The Chairperson then asked if there were any further questions for the Deputy Minister before he departed, as he had limited time remaining.

Ms N Mente-Nkuna (EFF) raised a question regarding the two bills concerning the RAF and the Road Accident Benefit Scheme Administrator (RABSA). She sought clarification on whether the RAF would be allowed to make comprehensive submissions, given their operational challenges, and whether those submissions would be fully incorporated into the revised legislation. She also asked if the Department intended to integrate both bills and restrict submissions to certain areas only.

Mr D Skosana (MKP) asked why the Road Accident Fund Amendment Bill, listed as No. 3868 and published in Government Gazette 49283 on 8 September 2023, had been withdrawn.

Mr F Essack (DA) asked the Deputy Minister whether he and the Minister would advise the RAF to abandon its ongoing litigation, which was costing millions of Rands. He pointed out that the RAF was a state entity, and that the executive should intervene in the public interest.

Deputy Minister Hlengwa explained that policymaking and legislation remained the responsibility of the Department and the Ministry's leadership, and this applied to all entities under their jurisdiction. He confirmed that the RAF had submitted a letter to the Chairperson, and had been advised to make submissions, which the Department would consider in line with policy direction. He emphasised that matters such as those highlighted by the RAF CEO -- particularly legal provisions that should properly fall under regulations -- would be reviewed to improve agility and efficiency.

He elaborated on RAF’s initiatives, such as the block settlement system, which aimed to engage with communities and improve service delivery. He reiterated that it was the RAF’s responsibility to engage with the RABSA Bill and make relevant submissions. He committed to meeting with the RAF board at a mutually agreeable date, and confirmed that these discussions would take place. However, the Department would still weigh all submissions against the broader policy objectives. The Department would have no issue with returning to the Committee to explain its policy direction in more detail.

Regarding the withdrawn Bill, he explained that the decision had been a policy call made in the broader interest of both the RAF and South Africa. He said that the Bill had been debated and tested, but new developments, thinking and conventions had necessitated a fresh approach through public participation.

On the litigation issue, he confirmed that the Ministry had advised the RAF on the accounting standards matter, and this advice had been communicated both in writing and previously in meetings. He emphasised that while the Department supported the RAF in exploring legal avenues where appropriate -- such as the SARS dispute -- the court action concerning accounting standards was a specific issue on which the Ministry had already taken a clear position. He said that the matter would be evaluated based on the outcomes of the court process and further responses.

He stressed that the Department’s goal was to support the RAF and enable it to succeed, as a failure by the RAF would reflect a failure by the Department. He emphasised that issues facing the RAF required collaborative effort, and reiterated that disagreements were to be expected in complex organisational relationships. He made it clear, however, that there would be no separation from the RAF, and that the Ministry’s role remained one of guidance and policy leadership.

The Chairperson thanked the Deputy Minister and formally released him from the proceedings. He noted that while discussions on court matters helped provide understanding, they could not be fully resolved in the Committee space and would be guided by court outcomes.

Mr Skosana (MKP) then followed up, acknowledging that the matter had been discussed earlier and emphasised that taking legal matters to court was a constitutional right. He stated that there was no wrongdoing in RAF pursuing legal remedies, particularly as the court had already issued an interim order in the matter between SARS and RAF.

The Deputy Minister responded by affirming that he had been the one to report to the Committee about the RAF’s intention to go to court on the SARS matter. He confirmed that an interim order had already been granted, and that the Ministry was awaiting the final judgment. He reiterated that they had initially explored intergovernmental relations (IGR) mediation, but after it failed, he had agreed that the RAF could proceed with court action.

The Chairperson added that he was aware Mr Skosana had joined the meeting late and therefore might have missed the earlier in-depth discussion. He reassured him that the Committee was well-informed about the matter, and confirmed that his remarks were noted and not in dispute.

Mr Skosana acknowledged the clarification and apologised for missing the earlier part of the meeting. He expressed concern that there had previously been accusations made against him for objecting to the use of lawyers in RAF claims. He emphasised again that people had the right to go to court if they were dissatisfied.

The Chairperson concluded by affirming that there was no real dispute between the Committee and the Deputy Minister regarding the RAF’s legal rights. He reiterated that the RAF had been given space to proceed with legal matters where appropriate, such as the SARS case.

Ms Potgieter explained that the matter in question involved the awarding of a fleet management solution contract in the 2014/15 financial year. She acknowledged that her memory had initially failed her, but confirmed that issues of improper conduct by RAF employees in managing the contract had emerged around 2019. These matters had been referred to a forensic firm for investigation. During the investigation, not only was the improper management of the contract uncovered, but the contract itself was found to have been improperly awarded. Disciplinary actions had been taken against the responsible employees. Furthermore, the contract had been referred to the SIU for further investigation. She clarified that the matter was related to the fleet data.

The Chairperson stated that the Committee would coordinate with the chairperson of the board and the Ministry to reduce the number of appearances by government entities before the Committee, which might otherwise hinder their work. The Chairperson committed to working with the SIU to arrange a presentation to the Committee once the unit had completed its internal processes and reached definitive conclusions. This would ensure that the Committee received a comprehensive update. He also noted that they would try to align the RAF’s appearance with other Committee engagements to reduce disruptions to the organisation’s schedule. The update from the SIU had already been circulated to the Members, and the Chairperson proposed postponing discussions on those issues until the presentation could be properly addressed.

Mr Essack asked whether any disciplinary actions were currently underway against RAF officials for irregular expenditure. He then referred to the report, which mentioned “other costs” under claim payments, and requested clarification on what was included in that category. His third question concerned a significant rise in consulting and professional fees -- he noted an increase from R70 million to R245 million in one financial year. He requested either an immediate explanation or a detailed breakdown from the RAF for the Committee to examine further. His fourth question was directed to the CEO, inquiring whether it was true that the CEO was currently holding a dual role, also acting as Chief Claims Officer. Lastly, he asked about the employment of a specialist security officer reportedly taken from Transnet, and requested clarification on the specific role and duties of that officer.

Ms T Nontenja (UDM) expressed concern over the loss of 246 employees, many of whom were skilled professionals. She asked what impact these terminations had on business continuity, and what the main reasons for the resignations or dismissals were. She inquired whether the RAF had any talent retention strategies to safeguard institutional knowledge and critical skills. Her final question focused on the effectiveness of the RAF board. She noted that the chairperson and deputy chairperson had been serving since 2019. She asked for their assessment of the board’s effectiveness in implementing the five-year strategic plan, given that it was now in its final year.

Mr N Maduna (ANC) began by acknowledging the work being done at the RAF, noting the difficulty of confronting monopolies in South Africa. He observed that the top 10 list of legal firms benefiting from RAF claims offered insights into the systemic inequalities. He said that the monopoly in South Africa was predominantly white and male, and suggested that this reality should be acknowledged rather than avoided. He pointed out that some of the most prominent law firms likely benefiting from RAF litigation, such as De Broglio, were white and male-owned, and this pattern had historical roots.

He sought clarification on the declining trend in the RAF’s litigation spending, and asked what factors had contributed to the decrease, commending the improvement. He also asked for more detail on the 4 031 claims that had been blocked for various reasons. Furthermore, he wanted to know when the RAF’s forensic unit anticipated concluding its investigations.

Addressing the issue of fraudulent claims and system abuse, Mr Maduna recalled that approximately 338 claims had been flagged in previous reports. He argued that corrupt practices by lawyers --including fraudulent claims, overcharging, and unnecessary delays -- contributed significantly to the RAF’s financial challenges. He emphasised that these fraudulent actions led not only to losses for the RAF, but also prevented claimants from receiving their rightful compensation. He also noted inconsistencies in judicial outcomes in RAF-related cases, and called for legal practitioners to appear before the Committee to explain these irregularities.

The Chairperson thanked Mr Maduna, and confirmed that Mr Denzil Bowman, Committee Coordinator, had already initiated communication with the Legal Practice Council to invite them to a future engagement with the Committee.

Mr Maduna continued by commending the RAF for recovering R317 million out of a potential R340 million from attorneys and sheriffs, noting that this achievement was rare in other portfolios, including those involving the SIU. He then directed a question to the CFO regarding the fleet management contract awarded in 2015, asking whether any of the individuals involved were still with the RAF or had since left. Regarding fraudulent claims, he asked for the total financial impact of employees who had attempted to change bank account details, and whether those individuals were still employed at the RAF. He also requested the name of the bank currently holding the R15 million in question, suggesting that the SIU or the CFO should already know this information.

He closed by highlighting the egregious conduct of certain lawyers, referring to a specific case where a lawyer had pocketed R14 million while paying a claimant only R750 000. He emphasised that being a professional did not excuse such unethical behaviour. He also praised the CEO for taking a case to the Supreme Court of Appeal, stating that leadership should not hesitate to seek the highest judicial recourse when necessary.

Ms Mente-Nkuna said the day’s discussions had been unusually refreshing, and less depressing compared to past sessions, which were often burdened by grim financial figures. She commented that following the dissolution of the RAF panel, the entity had become a battlefield for ideological struggles. She echoed her colleague’s view that white monopoly capital had targeted the RAF, and added that systemic issues from South Africa’s legal and governance structures had enabled this.

She encouraged the RAF board and its executive leadership, led by the CEO, not to feel apologetic about their work. She emphasised that the black government of South Africa had often been exploited as a source of wealth for opportunists, and that the RAF had not been immune. However, she stressed that the failures were worsened by outdated legislation, which urgently needed reform.

Ms Mente-Nkuna emphasised the need for legislative reform, noting that 30 years had passed since establishing the current framework. She pointed out that the Deputy Minister’s earlier remarks seemed to confirm the submission made by the RAF, particularly as the two bills under discussion presented fundamental differences. According to her, some of the proposed changes did not seek to alter the status quo, whereas the RAF’s proposals aimed to do so by tightening service delivery and targeting the correct beneficiaries.

She stressed that the RAF, as an institution, must transform. She referred to the RAF CEO’s earlier comment that the Fund serves South Africans who have attempted to work, but highlighted that many poor people living in remote areas remained uninformed. These individuals often did not receive updates or notifications about necessary documentation or opportunities to lay claims. She acknowledged the RAF’s budget constraints, but called for innovative solutions. She proposed a mobile outreach model that would reach smaller towns on specific days, improving accessibility for claimants in underserved regions. This, she suggested, could help locate individuals whose claims were stuck due to a lack of contact details, as she had previously seen large stacks of unprocessed claims during a site visit.

She questioned how far the RAF went in its efforts to trace claimants, pointing out issues with the postal service, missing or outdated addresses, and unreachable phone numbers. She urged that outreach efforts should not remain confined to large urban centres, but be extended to places such as Umtata, Pietermaritzburg, Durban, Nquthu, and Qwa-Qwa. She emphasised that complaints from the public about unpaid claims needed to be addressed proactively to maintain trust in the RAF.

She further referred to findings by both the RAF and the Auditor-General regarding litigation. Previously, 58.5% of claims were opposed in court, but after a shift towards settling directly with claimants, the figure had dropped to 81.9% being resolved without litigation. She saw this as evidence of legal abuse, and suggested that lawyers might be unnecessarily steering people towards court proceedings. She asked the RAF to identify specific behaviours so the Committee could engage the legal profession directly about these practices.

In terms of internal accountability, Ms Mente-Nkuna noted that a recent SIU report on medico-legal matters highlighted insider collusion with external actors. She stressed that legislative reforms would be ineffective if corrupt individuals within the RAF continued to exploit the system. She called for the identification, investigation, and accountability of these internal actors, stating that those found guilty should repay misappropriated funds.

She expressed appreciation for the cost savings achieved on both medical and legal expenses, highlighting that this allowed the RAF to redirect more funds to claimants. However, she flagged an issue in the medical sector -- the lack of consistency in hospital invoicing. For example, one hospital might charge R5 for a procedure, while another might charge R50 for the same service. She raised concerns that hospitals could begin refusing accident victims if they believed the RAF would not pay, resulting in unintended and potentially life-threatening consequences. She asked whether a uniform transversal fee structure existed that would apply, regardless of medical aid status.

Turning to the funding model, Ms Mente-Nkuna said the current situation was related directly to accounting standards. She urged the board's chairperson to respond to correspondence from the executive, emphasising that the AG and the RAF needed to resolve their long-standing accounting disputes. She believed that after 30 years, new realities demanded updated legislation. While the Treasury permitted some flexibility through the International Public Sector Accounting Standards (IPSAS), the AG’s insistence on a different standard had created conflict. She stressed the need for Parliament to step in, if necessary, to amend the law and align it with current and future conditions.

She suggested that the Standing Committee on Auditor-General (SCOAG) should receive recommendations from the RAF, and expressed concern about the inconsistency between mid-term strategies, annual performance plans (APPs), and oversight body interpretations. She emphasised that the current Parliament should not inherit unresolved matters from the previous one, and must produce clear recommendations to the House to fulfil its fiduciary duty.

Lastly, Ms Mente-Nkuna addressed the issue of alcohol-related accidents, lamenting the volume of claims resulting from drunk driving. She questioned the logic of a system that continued to pay individuals who were clearly at fault due to intoxication, despite laws prohibiting such behaviour. She called on the board's chairperson and the executive to reconsider the RAF’s responsibility in such cases, and said Parliament should support such efforts.

The Chairperson responded by noting that in private insurance scenarios, claims made by individuals found to be drinking while driving would not be honoured, suggesting a similar principle might apply to the RAF. He clarified that he had questions to raise, but sought confirmation on one key point first --specifically whether the RAF currently operated with a panel of attorneys.

Mr Letsoalo confirmed that the RAF still had a corporate panel of attorneys.

The Chairperson acknowledged that he may have misunderstood, and recalled requesting two lists from the RAF: one of legal firms like De Broglio, and another showing attorneys paid by the RAF. He asked that this information be made available at a future meeting, even if only partially complete.

He then asked whether the RAF had quantified delays in claim processing and court attendance, both in terms of volume and financial impact. He specifically wanted to know the value of default judgments resulting from the RAF not having legal representation in court.

Next, he raised concerns about the vetting of RAF officials. He referred to the Acting Chief Investment Officer, who had reportedly left the City of Johannesburg after facing disciplinary charges related to the withdrawal of R2.6 billion -- funds later linked to Regiments Capital, a firm cited during the State Capture Commission. The Chairperson asked whether the RAF was aware of this history, and if they had addressed the matter with the official. He questioned whether someone who had left under such circumstances should oversee RAF finances.

His final question focused on financial reporting. He had noted a significant increase in RAF investment income -- believed to be above R600 million -- yet cash and cash equivalents still appeared stable at the end of the financial year. He asked for reassurance that this was not due to delayed claims payments leading to cash accumulation.

The Chairperson concluded by recognising the financial constraints under which the RAF operated. He acknowledged that it was under pressure due to increasing road fatalities and the broad scope of its mandate. He commended the tightening of eligibility requirements for claims, and highlighted the responsibility of the Deputy Minister and Minister to present legislation that addressed these systemic issues. He assured the RAF that the Committee was sympathetic to the lack of road levy increases and reduced funding, but reiterated that the RAF must provide answers to the questions raised and offer clarity on the link between investment income and delayed claim payments.

Ms Mente-Nkuna requested that, like the previously provided list of lawyers, the Committee should be furnished with a list of hospitals that had submitted fraudulent claims to the RAF, specifically identifying the top ten in terms of the amounts involved.

Ms Francois thanked the Chairperson and Committee Members for their questions and comments. She began by expressing appreciation for the Committee’s continued support and understanding of the challenges the organisation and its leadership faced. She emphasised that their support was not taken for granted.

She addressed the question raised by Ms Mente-Nkuna regarding ongoing engagements with the Auditor-General. She assured the Committee that the RAF board was still actively engaging with the AG, and that it had tasked the audit committee to engage not only with the AG, but also with the Accounting Standards Board and the National Treasury's Accountant General in search of a technical solution to the matter, which had originated during the sixth administration and remained unresolved.

She clarified that the lack of a technical accounting solution was the main reason the issue had not been resolved, as the courts had yet to make a ruling on the matter. She noted that the ASB had begun a process the previous year to develop a relevant social benefit standard, and public comment had already been sought on the draft. The board hoped that once the standard was finalised, they would have a solid technical basis to withdraw the court case.

Ms Francois urged the Committee to assist in fast-tracking the finalisation of the standard, stressing the need for political support. She explained that the AG could not both set the accounting standards and audit against them, and had therefore directed the RAF to engage with the ASB, the body responsible for standard-setting. She reiterated that the board remained committed to engaging with all relevant technical bodies until the matter was resolved, emphasising that the issue remained a top concern for the organisation.

She responded to a question about whether there had been any significant improvements in organisational performance during the board’s term. She said there had been improvements, citing their five-year engagement with the Committee since the turnaround strategy began. She recalled that the RAF had faced a critical financial situation in its early years, to the point of requesting a comfort letter from the Department to support its solvency during an audit. She said that through efforts to increase its operational efficiency, the RAF was now paying 90% more claims than before, and had reduced legal costs by R24 billion over four years. She also noted that these improvements were helping poorer claimants, including fast-tracking claims for children under the age of 16.

Ms Francois explained that the withdrawal of the RAF Bill required a proper reconciliation of issues. The bill was designed to ensure the future sustainability of the RAF. Among the major provisions were the ability to pay claims in instalments, reducing reliance on lawyers in claims processing, and standardising medical tariffs. Work on these tariffs had already begun, and the calculations were with the Department. She handed over to the CEO to address operational matters.

Mr Letsoalo began by responding to questions in the order raised, starting with Mr Essack’s. He said that details about the disciplinary action for irregular expenditure had already been included in the financial statements, but assured the Committee that a full list of actions taken, including the nature of the charges and individuals involved, could be provided in writing later. He confirmed that all such actions were in line with National Treasury regulations.

He addressed other claim-related costs, noting that while legal costs were significant, a large portion also went to medical experts. He explained that lodging a claim at RAF often required the involvement of multiple medical experts offering varying opinions. These costs were reimbursed once the claims were approved. As an example, he mentioned a case where a patient’s attending doctor had charged R8 000 for an assessment, pointing out the financial burden this posed on individuals, especially the poor. He acknowledged that such fees were unregulated and a concern for the RAF.

Regarding consulting fees, he said a breakdown would be provided later, particularly around marketing and communication, as these areas accounted for a significant portion of such expenses. He commented that the RAF did not rely heavily on consultants overall.

Mr Letsoalo confirmed that he was playing a dual role was, explaining that despite advertising the post three times, the organisation had failed to find a suitable candidate to take on the work. He clarified that he received no additional compensation for also acting as Chief Claims Officer.

When asked about the appointment of a specialist security officer from Transnet, Mr Letsoalo said that with over 1 000 employees, he could not recall specific appointments without checking records. He promised to investigate and report back.

At that point, the Chairperson offered assistance by directing Mr Essack to clarify whether he had a specific name in mind.

Mr Essack responded that he had read the reference in the Committee’s report, and that his question was simply to understand the duties of a specialist safety officer. He invited the RAF to respond in writing.

The Chairperson then asked for clarity on the document from which the reference had come, to which Mr Essack responded that it was in the briefing document. The Chairperson reassured Mr Letsoalo that the Committee would consult the document, and assist him with specifics.

Returning to staffing matters, Mr Letsoalo said he was unsure about the reference to 246 employees leaving the RAF, suggesting it could be due to attrition through dismissals, resignations, or retirements. He said that while the impact on business continuity was minimal, institutional knowledge loss was not a major concern due to operational model changes. However, he acknowledged the operational delay caused by losing claims processors. He affirmed that in line with Parliament’s expectations for accountability, the RAF enforced progressive discipline and that fraud-related dismissals were non-negotiable.

Ms Nontenja interjected to clarify that the question about the 246 employees was hers. She expressed dissatisfaction with the uncertainty in the CEO’s answer, and requested a written response instead. She emphasised the need for clarity, since the figure was in their briefing document.

The Chairperson concluded that the RAF should provide a written response detailing their normal annual staff turnover, ideally over the last three years, to help the Committee contextualise whether the number of departures represented an anomaly. He also requested information on the organisational levels at which the departures occurred, without disclosing any names. He reiterated that such information would assist the Committee in determining whether there was a cause for concern.

Mr Letsoalo acknowledged the Chairperson’s guidance, and confirmed that he would follow it.

He said Mr Maduna had raised concerns regarding litigation costs and abuse of the system. This was a significant problem, not unique to the RAF, but common across social benefit schemes and even among insurers. He cited medical aid schemes as particularly prone to fraud and abuse, which the RAF also experienced.

He said that the duration of forensic audits varied, depending on the intensity of the matter. Criminal cases involving the police typically took longer, while civil cases were fast-tracked. The forensic unit worked towards set targets and could conclude matters more quickly if no external experts were required. Depending on their nature, some cases were referred to the LPC or the SIU.

On the issue of inconsistent judgments and legal fees, Mr Letsoalo expressed concern about legal representatives charging claimants up to 25% of their settlements. While acknowledging that it was lawful, he questioned the ethics of such practices, calling them unreasonable and inappropriate. He clarified that inconsistent judgments did occur, which was why the RAF regularly appealed decisions they disagreed with, aiming to seek higher judicial interpretation and correction of errors, rather than suggesting deliberate wrongdoing by the judiciary. He added that if the Committee found it necessary, they could invite members of the judiciary to explain such decisions.

Regarding Mr Skosana’s question about collaboration with the SIU on duplicate payments, Mr Letsoalo said that although R317 million had been mentioned, the total amount involved was approximately R1.2 billion. The RAF had already recovered a large portion of it, and transferred only R340 million to the SIU. He hinted that a particular bank was responsible for retaining duplicate payments and should return the money, similar to how the RAF was pursuing recoveries from Discovery and Bonitas. While tempted to name the bank, he deferred to the SIU for formal disclosure.

In response to Ms Mente-Nkuna’s comment on the amendment bill being withdrawn, he said this signified a step backwards for the RAF, although it was ultimately a policy matter beyond their control. The RAF merely implemented existing legislation. They would have preferred the bill not to be withdrawn, but acknowledged that the decision had already been made.

Mr Letsoalo described public outreach as a challenging area. The RAF was attempting to manage outreach through community radio stations and a Wellness Bus that visited rural areas. However, attempts to contact claimants directly had led to backlash from lawyers, including legal threats. The RAF would continue contacting claimants regardless, arguing there was nothing unlawful about reaching out to people who had submitted claims but had failed to follow up. Such contact often revealed that claimants were either unaware their claims had been paid, or needed to provide more information. Despite legal threats, the RAF would not cease these efforts, and if necessary, would contest the matter in court to ensure that claimants received what was due to them.

Mr Letsoalo also acknowledged internal corruption, noting that some RAF staff had been discharged for their involvement in fraudulent activities, often in collaboration with lawyers or medical institutions. He confirmed that a list of implicated medical service providers could be made available to the Committee.

Mr Letsoalo described the thresholds and medical tariffs situation as frustrating. The RAF had attempted to introduce new medical tariffs, which had been challenged in court. Many reforms at the RAF ended up in litigation. They were still waiting for the Department to finalise approvals for certain medical tariffs, which created delays. He recommended that the Committee call the Public Sector Classifications Committee, the Accounting Standards Board and the Accountant-General to clarify related matters, commenting that it had been difficult for the RAF to secure meetings with them.

On the issue of alcohol-related accidents, he highlighted that drunk walking was even more problematic than drunk driving. It was difficult for law enforcement to manage drunk pedestrians, since they often had no identification or a license. He pointed to research from the Medical Research Council indicating that 68% of road deaths involved alcohol. He criticised the alcohol industry's lack of accountability, and suggested that an alcohol levy should be introduced to fund the RAF, as the industry was not covering the societal costs of its product.

At this point, the Chairperson interjected to comment that the messaging on certain alcohol products, such as the carton of iJuba, seemed classist. He noted that it advised against drinking and walking, but did not include warnings about drinking and driving.

Mr Letsoalo responded that there might be a reason behind targeting such messages. He promised to provide the Committee with a list of plaintiff attorneys paid by the RAF and attorneys on the RAF’s corporate defence panel. He clarified that no legal panel had been dismissed -- rather, the contract had expired and was not renewed due to the R3.8 billion annual cost. Legal firms had taken the matter to the Constitutional Court after the RAF had chosen not to renew. While the RAF had lost in the North Gauteng High Court, it had ultimately prevailed in the Supreme Court of Appeal and the Constitutional Court.

He explained that the existence of a defence panel suggested a litigious approach, but the RAF preferred to settle cases. This approach aligned with the Ketsekele v RAF judgment by Judge Bertelsmann. He offered to share the judgment and a related research report by Prof Hennie Klopper, which showed that the RAF had settled 99.6% of matters out of court after incurring high litigation costs. He added that the RAF had saved R24 billion over four years by shifting strategy. Previously, they had spent R10.6 billion annually on legal fees -- R6.8 billion to plaintiff attorneys and R3.8 billion to the defence panel. They now spent approximately R3 billion annually on legal costs.

The Chairperson asked for clarification on the legal costs, referring to the top 10 slide that included De Broglio Attorneys. He wanted to confirm whether the R6.8 billion had been spent entirely on legal costs.

Mr Letsoalo confirmed that the R6.8 billion figure referred exclusively to legal costs. He reiterated that the RAF's current total legal spend was around R3 billion, supporting the claim that the RAF had saved R24 billion over four years.

On the vetting of officials, he confirmed that a screening process was in place. In the specific case mentioned by the Chairperson, he explained that the RAF had engaged with the City of Johannesburg and learned that the charges against the official had been dropped. However, the RAF had not examined the individual charges in detail. He reiterated that the screening process had revealed no current concerns.

The Chairperson sought clarity, asking whether there had been a formal case or a mutual separation between the official and the City of Johannesburg.

Mr Letsoalo replied that they understood there had previously been charges, which were subsequently dropped. However, the RAF could not confirm whether this was due to the absence of a case or a mutual agreement. He acknowledged time constraints and assured the Chairperson that the matter would be revisited in detail at a future meeting. He added that sometimes charges no longer existed because an individual had left the organisation.

The Chairperson advised Mr Letsoalo to strengthen the RAF's due diligence processes to avoid future scrutiny over appointments, stressing that the RAF was not the only agency subject to such oversight.

Mr Letsoalo agreed with the advice, and mentioned that he had previously faced unfounded accusations. The RAF would address the matter further in due course.

On investment income, he stated that the RAF earned income from funds kept in a call account. He declined to share further details on handling these funds, citing the risk of legal firms seeking to attach the money. He emphasised that disclosing too much information about the location and management of funds could compromise the RAF’s financial security, as many external parties were already trying to locate and seize these assets.

The Chairperson clarified that their earlier question had not been directly addressed, but acknowledged that it could be discussed at a later time. He explained that their request was to understand whether the cash balance needed to earn over R600 million annually on a call account, which required maintaining a balance of between R9bn and R11bn, was being properly managed. He expressed concern that the accumulated cash should not remain unprocessed in the bank, instead of being used to pay claims. The cash and cash equivalents at the end of the financial year were lower than expected, suggesting that the claims process likely followed a bell-curve pattern. He commented that the cash should not accumulate until the last three months of the year, only to be processed quickly to reduce the cash balance. He emphasised the need for reassurance on the cash management process and clarification on whether cash was accumulating unnecessarily.

Mr Letsoalo responded that this was exactly what they were doing. He explained that they raised the cash balance and accelerated payments as they approached the end of the year, ensuring they met the 180-day payment requirement. The payment process would be aligned with the 180-day requirement until they reached the point where they had enough cash to process payments more rapidly. He added that in the third and fourth quarters, they started reducing the cash balance, but this was affected by the potential R5.1 billion reduction from SARS. Without this reduction, they would have continued to reduce the 180-day balance in the final quarter, ensuring they had enough cash to carry them into the next financial year. He reiterated that this was the approach they were following.

Referring to legislation and policy, he expressed gratitude to the Committee for their support, but emphasised the need for legislative changes to address challenges in the coming years. He noted that without changes, particularly regarding the 180-day payment rule, court orders and settlements would immediately become due and payable, leading to increased attachments. He mentioned that if these legislative changes were not made, they would be forced to seek additional funding from the Committee to avoid defeat.

The Chairperson said they would invite Mr M Maimane, Chairperson of the Standing Committee on Appropriations, to discuss potential funding solutions. He thanked Mr Letsoalo and the RAF for attending the meeting and emphasised their goal of reducing unnecessary travel time for him while ensuring that the meetings were productive.

The meeting was adjourned