Simon Nare
The Standing Committee on Public Accounts (Scopa) has heard that the new Road Accident Fund (RAF) system is vulnerable to inflated and potentially fraudulent claims, driving up the total claim bill, even for cases that have been partially processed or finalised.
The committee continued hearing evidence in its enquiry into the entity’s procurement and governance affairs on Wednesday, with former Chief Financial Officer Victor Songelwa and former Senior Manager of the Actuarial and Reinsurance Unit, Itayi Walter Charakupa, in the hot seat.
Songelwa and Charakupa, both dismissed, concurred in their testimonies and in affidavits submitted to the committee that the new system, introduced with the arrival of since suspended CEO Collins Letsoalo, left the fund vulnerable to defrauding claimants after dismantling the internal panel of lawyers, who in the previous system would defend claims.
As a result, the fund ended up paying more money for fewer claims. The number of finalised claims had declined, resulting in claimants waiting longer to be paid out.
This is despite the RAF receiving billions from the South African Revenue Service, which flows from the fuel levy.
Songelwa said this was not enough to keep the entity afloat, as it was spending more on claims every month than money streaming in.
Both former managers believe that a new funding model has to be found, fast.
The rot, the former managers concurred, started when the entity changed its accounting policy, which resulted in litigation and expenditure. This also pushed the accumulated deficit well into the billions, with ActionSA saying earlier this month that according to its calculations, the entity had unrecorded liabilities of over R500 billion, and was “completely insolvent”. This amount was not disputed during Wednesday’s sitting.
The former managers said that no costing or visibility study was done for the new model and that Songelwa, despite being CFO, was excluded in the adoption of the new model.
“Would I be wrong to say the current model and legislation of RAF is a no hope, given the extent of the obligation of the Road Accident Fund in terms of the benefit that it must pay out versus the funding model?” asked Scopa chairperson, Songezo Zibi.
“I mean, those four hundred and some odd thousand (claims) even if RAF had to hire some 2 000 people to move them, there would actually be no money available for them,” he said.
Songwela agreed, saying that when he was presenting an annual report in 2019 in parliament, he raised the matter of the funding model being unsustainable.
“Money that we get on a monthly basis is not enough to service the claims that we have to pay out. In other words, when you settle your claim, the claims that you settle are always more that the money coming in. That is not sustainable at all. The law must change soonest,” he said.
Songelwa questioned the functionality, competency, diversity and knowledge of the board and pointed out that it was not playing its role as it should to ensure efficiency at the entity.
He said at one stage the RAF operated for months without a chartered accountant, yet it had to deal with complex matters that required the competency of one.
Songelwa spoke of the entity being ruled by fear and intimidation, where employees were not given room to be innovative.
“The environment in my observation was toxic. There was fear, so people that are fearful will not be able to express themselves. They will just do the little that they can and not go beyond,” he said.
Charakupa said that management should have put in place measures to reduce the average value of personal claims, but instead it experienced the flow of inflated, undefended settlements.
He said his department kept sounding warnings that the value of personal claims kept increasing, but they were pressurized by management not to paint a “negative picture” in their analysis reports.
The oversight enquiry was undertaken by the parliamentary committee after allegations of maladministration.
The committee has, since it started its hearing, been trying to secure the appearance of Letsoalo, but he insists Scopa does not have to authority for oversight, which he said is the purvey of the Portfolio Committee on Transport.
Letsoalo was suspended in June with immediate effect for financial mismanagement and possible corruption after the Special Investigating Unit probed the allegations. His contract came to an end in August 2025.
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