The Road Accident Fund (RAF) spent 84% of its legal fees on two law firms in 2024, despite having 43 firms on its panel.
The state-owned entity spent a total of R103.1 million on legal fees in the 2024 financial year, of which R86.62 million was allocated to just two law firms – Malatji & Co Attorneys Inc and Maponya Ledwaba Attorneys.
Malatji & Co was paid R55.87 million by the RAF in 2024, while Maponya Ledwaba received R30.75 million.
This was revealed in the RAF’s presentation to Parliament’s Standing Committee on Public Accounts (Scopa), which was delivered last week.
According to a report compiled by Moneyweb, these two law firms also received the lion’s share of the RAF’s legal fees during the 2023 financial year.
Malatji & Co was paid R15.25 million, while Mopanya Ledwaba took in R14.86 million, representing a combined R30.11 million of the R34.26 million corporate legal services bill the RAF accumulated that year.
This information was not initially made available to Scopa and was only provided after committee chair Songezo Zibi raised concerns that the group had still not received information about the top 10 law firms that had been given briefs by the RAF.
Zibi stated that the committee had requested this information twice already, and accused the RAF of deliberately withholding the information for improper reasons.
Acting RAF CEO Phathutshedzo Lukhwareni said that 43 law firms had been appointed to a panel by the RAF in December 2023.
Of this number, only 19 were briefed and paid during the 2023 and 2024 financial years.
Lukhwareni stated that the road fund has a panel and that selection does place depending on the complexity of the matter.
This prompted Scopa member David Skosana of the ANC to ask the RAF what criteria it used to decide on a task’s complexity to allocate a brief, and why only 19 of the 43 law firms have been given one.
Skosana also asked the state-owned entity what measures are in place to ensure cost effectiveness and equitable distribution of work among the firms on the panel.
Another Scopa member, Mark Burke of the DA, highlighted that Maponya Ledwaba Attorneys receives R30 million per year from the RAF, yet it only has one director, three senior associates, and an associate that doubles as a secretary and an admin clerk.
He questioned how so much money could be spent on a firm this small while still expecting to extract value from the transaction.
RAF responds
Lukhwareni said that some of the disbursements were for counsel fees and the cost is determined by the complexity of the matters they have handled.
Furthermore, he argued that if a matter is prolonged for a number of years and goes all the way to the Supreme Court of Appeal (SCA), the cost will be significant.
He added that repeat briefings are determined by the previous successes of the law firms in question.
However, he declined to comment on the size of Maponya Ledwaba Attorneys, stating he is not privy to this information.
“To the extent that they [the two law firms] are in the panel and are competent to be in the panel, I don’t see any unreasonability in that,” said Lukhwareni.
Mampe Kumalo, who was referred to by Lukhwareni as the RAF’s head of legal but is the fund’s chief governance officer, explained that “complex” cases have previously involved the South African Revenue Service (SARS), the Auditor-General, and Discovery Health.
The committee chair has requested that Kumalo provide Scopa with a detailed breakdown of the fees paid to the two law firms by close of business on Thursday, attorney fees, party-party costs, the cost of counsel and punitive costs orders against the RAF.
RAF in dire straits
Zibi questioned the RAF’s decision to repeatedly use the services of these two law firms, racking up millions of rands in legal fees in the process.
“The abuse of the system and the leakages of the money not reaching claimants in part is a result of the construct of the RAF,” he said.
“We should be spending it on claimants because the whole system is fundamentally structured in a way which is problematic, hence the bill that we will be bringing … to parliament.”
The RAF has been heavily criticized over the past few years for its poor financial performance, much of which is attributed to its over-use of the legal system to settle disputes, leading to hefty fees.
The entity currently spends around R2.57 million per car accident claim, leading to a R1.5-billion deficit as of the 2023/2024 financial year.
However, CEO Collins Letsoalo argued that the real reason for this deficit is that the entity’s main revenue stream – the RAF fuel levy – hasn’t been adjusted in three years.
The levy adds R2.18 to every litre of petrol sold in the country, and Letsoalo is pushing to raise this figure in line with inflation.
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