Billions lost as RAF axes lawyers — MP suggest alcohol tax to fill gap
A decision by the Road Accident Fund (RAF) to scrap its panel of lawyers has cost taxpayers billions of rand, a draft parliamentary oversight framework has found.
In a meeting of Parliament’s Standing Committee on Public Accounts (Scopa) on Tuesday, lawmakers discussed the preliminary findings of an inquiry into the beleaguered RAF — and floated new ideas to plug the funding gap, including a tax on alcohol.
The framework follows a parliamentary inquiry launched in 2020 after concerns about the RAF’s deteriorating finances, poor leadership and lack of transparency. The RAF, which compensates people injured or killed in road accidents, is funded mainly by a fuel levy — currently just over R2 per litre.
According to the draft, the RAF’s decision to cancel its legal panel in 2020 — without implementing a viable alternative — left the state entity legally exposed. This led to undefended cases, default judgments, rising claim values and punitive cost orders against the fund.
The move, initiated by former CEO Collins Letsoalo, meant the RAF had no legal representation in court, and cases were either delayed or lost outright.
“Punitive costs [were] incurred by the RAF — billions of rand — due to matters the RAF cannot attend in court,” the report stated.
The committee also found that average claim values increased due to a lack of defence, inflating payouts. Changes to the RAF claims system worsened the situation. The introduction of a new RAF 1 claim form went ahead despite internal legal advice warning against it.
“The new RAF 1 form has excluded registration of possibly hundreds of claims,” the committee said, warning that if courts ruled these claims must be accepted, the RAF could be liable for massive backdated payouts.
Audit outcomes have worsened significantly, the report noted, shifting from a clean audit to two disclaimers and three adverse opinions in recent years. Committee members also raised red flags about procurement irregularities, staffing issues and poor labour relations.
“There [was a] high financial impact from many employees suspended on full pay,” the report said.
RAF’s reported performance figures were called into question too. Targets failed to measure its core mandate — actual compensation to claimants.
Scopa member Helen Elizabeth Neale-May suggested new revenue models be considered.
“We obviously use the money that comes from the petrol levy,” she said. “But have we not made other recommendations — like a special tax on alcohol or even the gambling industry? Because one cannot take any more from the petrol levy.”
Letsoalo, who made the decision to dissolve the legal panel, failed to appear before Scopa despite being formally summoned. Parliamentary processes to compel his attendance are ongoing.
Scopa is expected to finalise its recommendations to the RAF and the Department of Transport soon.
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