The Road Accident Fund (RAF) paid R231.7m in performance rewards despite receiving an adverse audit opinion, the standing committee on public accounts (Scopa) heard on Monday.
The figure, disclosed in the RAF’s annual report tabled before parliament, has drawn scrutiny from Scopa, which is conducting a formal inquiry into the fund’s financial and governance failures.
The performance rewards were paid in a year when the auditor-general of SA found the RAF’s financial statements to be materially misstated.
The audit opinion cited noncompliance with the generally recognised accounting practice (GRAP), incomplete disclosure of irregular expenditure, and the continued use of Ipsas 42 — a standard not recognised by the auditor-general for claims liability accounting.
The RAF lost its legal challenge on the matter, and the dispute remains unresolved.
In parallel, the fund’s requested but not yet paid (RNYP) liability, representing amounts owed to claimants on finalised claims, rose from R36.9bn to R40.4bn. The increase reflected a persistent structural mismatch between monthly fuel levy income and lump-sum compensation obligations. While the RAF reported improvements in operational efficiency, including a record 88.16% of total compensation paid directly to claimants, the underlying financial strain remains acute.
Scopa has raised concerns about the appropriateness of performance rewards in the context of audit noncompliance and unresolved liabilities.
During recent hearings, committee members questioned whether the RAF’s internal performance metrics were sufficiently robust to justify the scale of bonuses paid.
The inquiry has also heard testimony from suspended officials and former executives, including former CEO Collins Letsoalo, who described a breakdown in internal controls and irregular procurement practices.
The RAF’s annual report confirms that the fund remains in breach of the Public Finance Management Act, which requires accurate and complete financial reporting.
The report also acknowledges “material control failures” and outlines a mandate for the newly appointed interim board to restore governance stability.
“The interim board’s immediate focus is to conduct a comprehensive assessment to identify areas for short-term improvement,” chairperson Kenneth Brown said.
“This includes addressing the critical challenges with accounting standards and the need for greater transparency.”
The department of transport has reintroduced the Road Accident Benefit Scheme (RABS) Bill, which proposes a shift from the current fault-based model to a no-fault, defined-benefits system.
Parliamentary legal advisors have indicated that the bill must comply with section 27 of the constitution, which guarantees the right to social security, and section 195, which mandates efficient and economic use of public resources.
While the RAF’s operational indicators show progress — such as reduced legal costs (down 80.10%) and improved claims validation turnaround (98.49% within 60 days) — the escalation in performance rewards amid unresolved audit findings and rising liabilities has become a focal point of parliamentary oversight.
roost@businesslive.co.za
