The frequency with which the Road Accident Fund (RAF) is in the news recently attests to the ongoing problems with the organisation, which is responsible for paying the legitimate claims of road accident victims.
Funded largely by a dedicated levy on fuel sales, its revenue amounts to about R50bn annually but the organisation has been technically bankrupt for decades, with liabilities exceeding its assets at end-March 2024 by R25bn.
There has for instance been the long-running legal dispute with the auditor-general about the application of accounting standards, which has been contested right up to the Supreme Court of Appeal; conflict with Discovery over the RAF’s refusal to pay claims already paid by the medical aid and complaints about the long delays in paying claims.
The Special Investigating Unit (SIU) has been engaged for many years in investigations into a raft of allegedly irregular procurement contracts, such as the termination by the RAF of the use of a panel of attorneys to litigate claims as well as into 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, among others.
One of its investigations, which raises questions about the ethics of the legal profession, was into the duplicate payments made to law firms for road accident claims. The amount involved was a staggering R340m up to March 2021 with R318m having been recovered so far. Equally staggering was that 102 law firms, including sheriffs, were involved in the investigation.
Because the RAF paid claims only 180 days after they were due, law firms obtained writs of execution against RAF bank accounts to ensure early payment of their claims, but did not refund the RAF when it paid out the claim after the 180 days. On a generous albeit naive interpretation, one could perhaps suggest that with the flow of money into and out of accounts this double payment could have been missed by both the RAF and the law firms, though were this to be the case it would suggest negligence if not incompetence given the sums involved and the regularity of the duplicate payments. The RAF should surely have picked this up itself and used technology to immediately identify the duplication.
The more sinister and likely interpretation is that the law firms turned a blind eye to this welcome augmentation of their coffers, which implies a lack of honesty and ethics by a profession whose avowed role is to uphold the rule of law.
To date, five legal practitioners have been referred to the Legal Practice Council. Some attorneys who received duplicate payments have been struck off the roll, and the Hawks are investigating alleged offences by 12 law firms/legal practitioners.
It was only after the SIU started probing the affair that law firms signed acknowledgments of debt and started paying up and even here suspicions about their ability to immediately pay such large sums prompted the SIU to investigate whether trust funds were illegally used to settle the debt.
There have also been reports of lawyers retaining a disproportionately large portion of the claims payout due to accident victims for themselves.
On the other hand, it is trite to point out that the RAF also needs the legal profession. As the SIU team of officials told parliament’s standing committee on public accounts last week, the dissolution of a panel of attorneys that defended claims on behalf of the fund resulted in a loss to the RAF between 2018 and the second quarter of 2023 of R4.3bn due to default judgments and its having to pay more than it should have for undefended claims.
There has long been recognition that the RAF model is flawed. This was identified two decades ago by the Satchwell Commission that recommended a no-fault basis of paying claims, which would have reduced the need to use attorneys. The problem persists as the recent attempt at reform in the Road Accident Fund Amendment Bill was recently withdrawn by the department of transport after opposition.
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