South Africa’s Road Accident Fund (RAF) is being bled dry by “suspicious and exorbitant” claims, according to CEO Collins Letsoalo.
The RAF reported an R8.43-billion deficit for the 2022/2023 financial year and is struggling to keep up with the number of claims filed, resulting in a backlog of more than 321,000 cases.
However, the Special Investigating Unit (SIU) has highlighted other failures within the organization, including corruption.
Funds drying up
Letsoalo spoke in a recent interview with City Press, stating that the number of crash victims claiming from the RAF has gone up substantially and that some individuals are claiming for amounts in the hundreds of millions of rands.
Much of the RAF’s financial issues are the result of non-South Africans making these exorbitant claims, however, the extent to which “foreigners” are responsible for this has so far not been corroborated by the preliminary findings of the SIU, said the CEO.
Opportunistic and fraudulent claims by both locals and foreigners are a matter that is continually being investigated by the authorities.
The CEO provided several examples of unusually high claims filed by non-South Africans amounting to hundreds of millions of rands, following a recent High Court judgement that declared a regulation from the Department of Transport and a management directive from the RAF invalid.
The regulation and directive attempted to bar foreigners who were in South Africa illegally from submitting claims to the Road Accident Fund, however, the RAF Act states that non-South Africans are entitled to compensation from the fund.
Meanwhile, the SIU has been investigating “serious maladministration of the affairs of the RAF” and “irregular, improper, or unlawful conduct” for a while now and is expected to complete its probe by mid-2024, writes BusinessTech.
The preliminary findings produced by the SIU suggest that the RAF’s financial issues are much deeper than just non-South Africans making opportunistic claims, and that internal corruption may play a part in the matter.
The Auditor General identified eight contracts that are now under investigation by the SIU for procurement and tender irregularities, including a case where the RAF cancelled a contract with its panel of attorneys in 2018 leading to R4.78 billion in default judgements being ordered against them up until the second quarter of 2023.
Another issue is that, as of March 1, 2021, as many as 102 law firms received duplicate payments from the RAF totaling more than R340 million – 93.4% of which has since been recovered by the SIU.
There have also been allegations that many services and invoices submitted to the RAF are overpriced, leading to investigations into possible collusion between RAF employees and service providers.
Finally, on the matter of misleading claims, the SIU is following up on allegations that RAF employees made fraudulent bank account changes on the entity’s internal system and redirected funds meant for service providers into their personal accounts.
The SIU’s recommendations for the RAF to resolve these matters include periodic bank reconciliations to detect and prevent duplicate payments, and performing checks and balances on claims prior to effecting payments to see if any writs of execution have been made on that claim.
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