Exposing the road entity that receives R43 billion per year in petrol taxes

The Standing Committee on Public Accounts (SCOPA) has exposed several major concerns relating to the financial mismanagement of the Road Accident Fund (RAF).

The RAF is a state entity that is funded by the Road Accident Fund Levy, a tax that adds R2.18 to the cost of every litre of fuel sold in South Africa.

It raises approximately R43 billion per year, which is meant to be used to pay out claims for persons injured in motoring-related accidents that result in serious injury, loss of life, or loss of income.

Only 60% of this money goes towards claimants, while the other 40% goes towards covering administrative costs.

The RAF has been plagued by accusations of maladministration for several years, as financial information supplied has been unreliable and incomplete for audits to be completed.

This prompted SCOPA to begin its probe on 6 October, demanding truthful and accurate information about the fund’s operations.

Action SA MP Alan Beesley described the RAF as a “black hole” and that no one knows how deep the issue goes, labelling it “the government’s concealed rot.”

The parliamentary committee received over 100 submissions  lawyers, doctors, RAF staff, and victims and is now calling on these parties to make statements in the committee to uncover the extent of the rot in the RAF, reported Newsday.

The list of allegations includes inadequate background checks on senior executives with a pattern of reckless financial decisions, and financial mismanagement.

It also flagged the entity’s sluggish claims processing time, as the average claim now takes four years to pay out.

In a parliamentary hearing, former Chief Actuary of the RAF, Itayi Charakupa, said there is “no logical reason why” the RAF should underreport its liabilities, as has been uncovered. 

“Whether it is R1 trillion or R1, we are a public entity, we’re not raising funding. It is crucial for decision makers to know the RAF’s accurate state of affairs,” he said.

The RAF allegedly spent R10 million on personal security for now-suspended CEO Collins Letsoalo, including hotel stays for bodyguards.

It has received an adverse or disclaimed audit opinion for the last five years from the Auditor General of South Africa (AGSA).

As of the 2024/2025 financial year, the RAF is running on a R27.8 million deficit. This amount has been ballooning for over ten years.

It has been technically insolvent for well over a decade, with liabilities that far exceed its assets.

Unapproved accounting methods

One reason why the RAF’s audit opinions are unfavourable is because it uses an accounting method, IPSAS 42, which is not sanctioned by the AGSA.

This has led to the misstatement of outstanding claims liabilities and claims expenditure, including claims by car accident victims that have been registered but not yet paid.

Using this unlawful accounting principle, the RAF’s stated claims liability dropped from R330 billion to R27 billion in 2021.

Beesley said that they are attempting to uncover the debt restructuring and run calculations to determine the entity’s unrecorded liabilities, which is estimated to be over R500 billion.

That’s nearly a fifth of the national government’s entire annual budget.

“My sense is that the actual hole in the RAF is massive and unknown and a huge expense to South African taxpayers,” Beesley told Newsday. 

He explained that this “black hole” was created through unauthorized and non-compliant accounting standards, as well as unlawfully changing the process for registering claims.

Despite taking in roughly R43 billion per annum, the RAF has drastically reduced the number of claims it has paid out to victims over the last few years.

Those who have managed to make a successful claim are now facing significant payment delays.

The RAF introduced new paperwork in 2022 that doubled the claim from from 12 to 24 pages, which was deemed unlawful by South African courts.

Parliament heard last week that most claimants are rarely able to complete the paperwork without the assistance of an attorney.

Since this change was introduced, the number of registered claimed dropped from 300,000 in 2021 to 100,000 in the last financial year.

Of the roughly 100,000 claims it received, 72% were rejected.

“Taken together, these accounting and administrative manipulations have concealed more than R500 billion in unrecorded liabilities, one of the most serious financial misstatements by any state entity in democratic South Africa,” Beesley said. 

SCOPA also stated that several industry whistleblowers have come forward reporting more than R1 billion in supply chain irregularities.

Despite its financial shortcomings, the RAF spent R4 million on an awards ceremony in March 2025.

It also defended two contracts, each with an allocated budget of R100 million, for marketing campaigns awarded to Media Mix 360 in 2022 and Dzinge Productions in 2024.

Both contracts were flagged for dodgy invoices, including one for a R48,300 hat.

Sunshine Hospital, which is owed R300 million by the RAF, was ultimately forced to shut down after it issued 6,285 summons and obtained 647 judgments totaling R180 million.

The RAF has defended its position, stating that its poor audit outcomes have been caused by a disagreement with AGSA over its classification.

The entity argued that it is a social benefit fund and is therefore entitled to use non-standard accounting methods, which it says better reflects the RAF’s mandate to compensate victims without a profitability metric.

It also lamented its funding model, which it says is outdated and does not account for inflation and rising claim costs.

Parliament remains sceptical of these defences, with SCOPA chair Songezo Zibi labelling the RAF “broken.”

He added that the inquiry will potentially be “precedent-setting” for accountability in South Africa.