The Standing Committee on Public Accounts has uncovered how the Road Accident Fund manipulated accounting standards to conceal massive liabilities from unprocessed claims. Testimonies revealed deliberate delays in claims processing and the suppression of professional advice to maintain an illusion of solvency. Victims' groups are calling for urgent reforms to address the humanitarian crisis.
The Standing Committee on Public Accounts (Scopa) inquiry into the Road Accident Fund (RAF) has revealed a pattern of financial manipulation designed to bury billions in debt and claims. Chair Songezo Zibi emphasized the need for substantive discussions, stating, “We can’t have a meeting just for the sake of ticking-the-box compliance.”
At the heart of the issue is an accounting strategy where the RAF switched standards and slowed claims processing to keep them “in transit,” avoiding recognition as liabilities on the balance sheet. Former chief actuary Itayi Charakupa testified that processing all outstanding claims would deplete the fund's cash immediately. Actual processing times averaged three years, far exceeding the targeted 120 days.
Professional firm Morar Incorporated advised sticking with IFRS 4, the insurance contracts standard used since 2014/15, until a new social benefits standard was issued by the Accounting Standards Board in 2023. However, RAF management instructed Morar representative Anesh Bikram to verbally withdraw the opinion, claiming it was outside the scope, and the firm was not paid. Zibi described this as “unusual,” noting, “To ask for advice... to then ask them to expunge the document from existence... seems odd.”
A 2020 PwC organizational review, led by Dr Dayalan Govender, highlighted escalating legal fees described as “exorbitant.” Zibi pointed out cost per claim had more than tripled: previously R10 billion for 253,000 claims, now R7 billion for 63,000, projecting over R20 billion for full processing. Between 2020 and 2024, new claims dropped 65% and finalized matters 58%, linked to the strategy supporting the unlawful Board Notice 271 of 2022.
The RAF's failure to pay over R300 million in claims forced the closure of Sunshine Hospital, adding R23 million in legal fees and interest. Association for the Protection of Road Accident Victims deputy chair Ngoako Mohlaloga called it “a humanitarian and fiscal crisis,” demanding withdrawal of the 2022 notice, return to the 2008 RAF Act, and re-registration of rejected claims.
Scopa plans to subpoena former CEO Collins Letsoalo for his response. Zibi envisioned a “frictionless process” using technology for timely claim finalization, underscoring the fund's forgotten mandate to aid road accident victims.