Transport minister Barbara Creecy has thrown down the gauntlet to the Road Accident Fund (RAF), warning that if it continued with its dispute with the auditor-general (AG) over accounting standards she would initiate a financial misconduct case against the fund’s board.
Speaking during a question-and-answer session between MPs and ministers in the economic cluster in the National Assembly on Wednesday, Creecy said she and deputy minister Mkhuleko Hlengwa had instructed the RAF not to proceed with the case “and should they do so, I will initiate a financial misconduct investigation of the board as this might constitute a violation of the Public Finance Management Act”.
The RAF’s dispute with the auditor-general, which has reached as far as the Supreme Court of Appeal, is about the application of accounting standards. The court rejected its appeal against a high court judgment.
The dispute centres on the use by the RAF of the International Public Sector Accounting Standard (Ipsas), despite the auditor-general insisting on the use of the Generally Recognised Accounting Practice (Grap). The auditor-general issued a disclaimer on the RAF’s 2020/21 financial statements, as a result.
‘Reckless’
Using Ipsas, which allows for the recognition of liabilities only when eligibility criteria are met, rather than Grap, which requires recognising liabilities for incurred but not reported claims, enabled the RAF to reduce its liabilities from R327bn in 2019/20 to R34bn in 2020/21.
DA transport spokesperson Chris Hunsinger said many regarded the RAF’s “stubbornness” not to follow prescribed accounting standards as an indictment of its management and board that continued on its “reckless and irresponsible” path of court appeals against the auditor-general.
Hunsinger asked Creecy if she said it was fair for the RAF to use taxpayers’ money for these “seemingly pointless yet planned judicial challenges”.
ACDP MP Steve Swart expressed concern over the manner in which the RAF litigated against claimants, saying there were innumerable examples of this. He referred to an April judgment by acting judge W Domingo who severely castigated the RAF for “contemptuously ignoring all court orders issued and abusing the court processes. After 13 years in this case still the claimant has not received payment”.
Swart asked Creecy what was being done to expedite the finalisation of claims against the RAF without going to court, adding that only 6% of cases were settled before court. Alternatively, if court proceedings were instituted, what was being done to finalise matters as soon as possible?
No-fault process
Creecy replied that ultimately the solution lay in the introduction of a no-fault system of payment of road accident claims as recommended by the Satchwell commission more than two decades ago.
“It is my intention once we have gone through necessary processes to bring a bill before this assembly that would institute a no-fault process so that where there are not grounds for legal proceedings, claimants should be able to claim and be settled on the basis of known compensation on a no-fault basis. I think this would be most helpful.
“With regard to the backlog of cases, the deputy minister has been meeting with the deputy minister of justice and in most of the jurisdictions of the department of justice we have managed to get court dates and to clear the backlog. We still have difficulties in Gauteng and we are working on those difficulties because we don’t think it is acceptable that claimants wait for five years for a court hearing.”
RAF cases have clogged up the Gauteng high courts, which have been assigning court dates as far as in 2031.
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