Lawyers acting for clients with claims against the Road Accident Fund (RAF) received duplicate payments of about R340m in the period up to March 2021, with R318m having been recovered so far, RAF COO Leonard Lekgetho told MPs.
This is one of several cases investigated by the Special Investigating Unit (SIU) involving the RAF, which is responsible for paying out legitimate claims by road accident victims. It is funded by a levy on fuel sales and has been embroiled in a number of allegations of maladministration.
SIU head Andy Mothibi headed a team of officials that briefed parliament’s standing committee on public accounts last week on the preliminary findings of this and other investigations against the RAF. The investigations include the termination of the use of a panel of attorneys to litigate claims as well as irregular procurement contracts dealing with backlog claims, an office building lease, a fleet tender, cleaning and security services, SAP licences, office furniture and fraudulent claims by employees.
The outcome so far of all SIU investigations into the RAF include actual cash recoveries of R318m, potential disciplinary referrals (20), referrals to the National Prosecuting Authority (20) and administrative referrals (5) to the SA Revenue Service (Sars) and the Legal Practice Council, and blacklisting.
Lekgetho said the SIU investigated 102 law firms (including sheriffs) who benefited from duplicate payments facilitated by the use of writs of execution against RAF bank accounts ahead of the fund’s normally delayed payment for the claim. The investigation is ongoing.
Some lawyers signed acknowledgments of debt of R71m of which R43m has been recovered so far. In addition, R276m was paid directly to the RAF by legal practitioners, which the SIU is investigating to determine whether there was a possible misappropriation of trust funds to make the payment.
Lekgetho said the SIU civil litigation unit was considering legal action against law firms failing to honour their acknowledgment of debts. To date five legal practitioners have been referred to the Legal Practice Council. Some attorneys that received duplicate payments have been struck off the roll and the Hawks is investigating alleged offences by 12 law firms/legal practitioners.
Another SIU investigation concerned the removal in May 2020 of the panel of attorneys the RAF used to defend disputed claims. Lekgetho said the investigation was complete and the SIU was finalising the referral of the matter for civil litigation. The cancellation of the panel contract was irrational, he said, in both law and administration and resulted in a loss to the RAF between 2018 and the second quarter of 2023 of R4.3bn due to default judgments and having to pay more than it should have for undefended claims.
He said the RAF cancelled the panel of attorneys without a backup plan as to who would represent it in court and lacked representation for at least 12 months before an arrangement was made for state attorney representation later as an afterthought. The decision not to continue contracting a panel of attorneys was not approved by the RAF board. The board did approve a strategy for the RAF to reduce its administration costs, including legal costs.
“The SIU is preparing the necessary evidence packs for referrals relating to disciplinary/administrative action/civil litigation against all members responsible for causing loss, damages and/or contraventions of the law,” Lekgetho told MPs.
The RAF then entered into an irregular arrangement with the Government Employees Pension Fund to use its corporate panel of attorneys. The SIU estimates that irregular payments for this contract amounted to R142m. It also conducted a financial analysis, including the bank statements of the attorneys appointed. Lekgetho said: “The preliminary findings suggest that some of the RAF executives were possibly paid monies by the attorneys appointed in the RAF corporate panel of attorneys. This investigation is ongoing.”
Lekgetho said it appeared that there was no fair allocation of work among the panel, with one service provider getting almost 90% of the work. It appeared that one of the executives who was possibly paid money by the attorneys might be using two identification numbers.
He added that the SIU was finalising evidence for the NPA and civil litigation as well as for disciplinary action.
The SIU has also completed an investigation into expenditure of R313m on an irregularly awarded contract to address the backlog of claims and is planning to refer the matter to the SIU Special Tribunal.
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