RAF financial and administrative hurdles laid bare

Cape Town - The Road Accident Fund (RAF) told Parliament’s portfolio committee on transport on Wednesday that the organisation’s business had had to lease various items instead of buying them in order to prevent the sheriff of the court from attaching its office goods.

This drastic state of affairs signified the financial and administrative crisis the fund found itself in, as the yawning gap between claims lodged and claims turned around remains stubbornly high and accusations of fraud and bad spending persist.

The RAF meeting with Parliament comes amid accusations that RAF CEO Lindelwa Jabavu’s qualifications were false. It also comes amid leaks to the media claiming the RAF was paying IT giant SAP millions to do work for which no contract exists.

RAF and board chair Ntuthuko Bhengu told the committee that in the 2017/2018 financial year the RAF registered 271 933 claims and settled 234 701. This does not count those overlapping from previous years or the massive backlog in claims.

The RAF made 316 749 individual payments; 19 827 general damage payments; and 181 358 medical payments in the same financial year. He said, thanks to a boost of R37.4bn from the fuel levy, the RAF’s revenue increased 13% to cover the 6.6% growth in claims to R34.1bn.

“Funding the RAF through a fuel levy is not associated with claim frequencies and the cost of processing them. Compensation is awarded on a fault basis and fault must be proven or excluded in each case. The beneficiary base is not constituted by past, present or future contributors,” said Bhengu.

Jabavu said the RAF in recent years opted to lease items, including furniture and vehicles, instead of buying them. This is because, when the RAF was unable to pay claims ordered by the courts, the sheriff of the court would attach these items if they owned them and the fund’s office would then be without tools to operate.

“We lease items like furniture and vehicles, because we find that, when we buy items and we lose in court, the sheriff comes to our offices and seizes the items that we buy so that they can be sold on auction,” said Jabavu.

Regarding recent media leaks, Bhengu said the RAF was willing to subject Jabavu’s qualifications to an audit by the SA Qualifications Authority. However, he said, the leaks of information to the public have rendered the work of the board, which must occasionally guarantee stakeholders confidentiality, impossible.

“One of the queries we get from the media lately relates to questions around the CEO’s qualifications. We are prepared to subject those qualifications to SAQA for verification but it is not right to resort to sabotage when dealing with this question.

“It has come to a point where I cannot guarantee the confidentiality of anybody who engages with the board. Leaks undermine our ability to secure trust of the board and other stakeholders. We have come to the point where we have asked all board members to submit their iPads,” Bhengu said.

Portfolio committee chair Dikeledi Magadzi urged the RAF delegation to perform a forensic investigation on their target and how they were developed.

"Investigate where the statistics you present to us come from and whether they are credible," she said.

“There is a fear that there could be a falsification of statistics. I would implore the board to consider a forensic look into these statistics. We have to be sure about this as we are dealing with fraudsters and crooks who take advantage of the fact that a lot of money is changing hands in processes riddled with leakage,” said Magadzi.

Magadzi said, if the RAF was not clear on its targets, it ran the risk of either punching below its weight or underachieving on impossible targets.

“We look forward to holding you accountable on what you have given to Parliament. You have two smart, measurable targets rather than thirty targets that are so nebulous that you can’t tell the state of the entity once you consider them all,” she said.

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