‘Reckless and irresponsible’ for RAF to continue its appeal against AG disclaimer

‘This court action and any further court action is a red line for the [transport] ministry and we will not accept that it continues’ – DoT deputy minister.

Deputy Minister of Transport Mkhuleko Hlengwa says it remains his department’s position that it will be “reckless and irresponsible and not in the collective interests of the Road Accident Fund (RAF)” for it to continue on its path of court appeals against the Auditor-General (AG).

This follows three court judgments against the RAF.

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The High Court in Pretoria dismissed the RAF’s legal challenge with punitive costs in favour of the AG, resulting in the RAF filing an application for leave to appeal that was dismissed.

Read: RAF says improvements in financial performance not sustainable without legislative changes

The RAF then petitioned the Supreme Court of Appeal (SCA) for leave to appeal, which was also dismissed. The fund then appealed to the Judge President of the SCA for reconsideration of the matter, and the decision is still pending.

Hlengwa told Parliament’s Standing Committee on Public Accounts (Scopa) on Wednesday that nobody is against changes in the RAF’s accounting standards if deemed necessary but stressed it has to follow the parameters of due process, and in this case that has not happened.

He said the Transport Ministry did not want an RAF “that is living in the courts”.

‘Fund cannot be selective’

Hlengwa said the RAF cannot be selective in what it accepts from the AG, which also applies to court rulings.

“There has to be a semblance of principle, which is the yardstick measure of what we do and how we do things as far as we are concerned. An audit outcome is the basis on how we respond to the challenges.

“We have every intention to give RAF the necessary support for it to do the right things and fulfil what it is expected to fulfil.

“But … on the record, we are not in agreement with the direction that has been taken in so far as this matter of the accounting standard is concerned,” he said.

Hlengwa said this was not based on anything else other than the fact that the journey traversed so far indicates that it is not a viable and sustainable path.

“Why should we continue on it when we should actually focus on ways and means through consultative processes and engagements?” he said.

Hlengwa said any changes required to the RAF’s accounting standard must follow a legislative review.

Read: Deputy minister: RAF should pursue legislative reform, avoid ‘arbitrary changes’

“That is the commitment that we are placing on the table, that is the exercise we are engaged in,” he said.

Hlengwa said he has already asked the director-general and deputy director-general of transport to begin a process of putting together a technical team to ensure they bring the necessary knowledge, skills and expertise required for this exercise.

“But chair, this court action and any further court action is a red line for the ministry, and we will not accept that it continues,” he said.

CEO chastised 

New Scopa chair Songezo Zibi, the leader of Rise Mzansi, chastised RAF CEO Collins Letsoalo for attempting to re-litigate the RAF’s dispute with the AG in the Scopa meeting.

“This is not going to help the proceedings because we are redoing the court case, which is inappropriate.

“We have accepted the matter is under litigation. Ultimately, notwithstanding what you have told us, the courts have found against the RAF.

“We are not the judiciary here. The arbiter of legal disputes in South Africa is the South African judiciary. We are not going to litigate the matter here please Mr Letsoalo,” he said.

Read: RAF board, CEO must be held personally liable for cost of AG disclaimer challenge: Scopa

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Letsoalo said the R10.7 million the RAF has spent on legal costs in its dispute with the AG is not fruitless expenditure because the fund must have clarity.

“We are spending R10.7 million to avoid accounting wrongly for R350 billion at least. It will create clarity about who we are and how we must account,” he said.

Illegal foreigner claims

Regarding the RAF’s refusal to allow illegal foreigners to benefit from it, Letsoalo said the fund does not know why the law is not preventing foreigners from claiming.

He said that when you go to other countries, you are not allowed to claim social benefits and are told to take out insurance for yourself and sign (a document) that you will never ask for social benefits in that country.

Letsoalo said the RAF’s biggest beneficiary was a Swiss national who received more than R500 million.

Read:
RAF notice that saw claimants ‘excluded’ declared unconstitutional [Nov 2023]
Attempts to exclude illegal foreigners from submitting road accident claims ‘invalid’ [Mar 2024]
RAF not done arguing the validity of denying benefits to illegal foreigners [Jun 2024]
RAF leave to appeal illegal foreigners judgment dismissed with costs [Jul 2024]

Hlengwa said the transport department agrees that the whole notion of foreign claimants, legal or illegal, has to be reviewed and must be part and parcel of the visa review agenda, which South Africa is currently seized with.

“There is something fundamentally irregular in that. There is reference to a Swiss claim, there’s also claims from Americans of R101 million and Belgium doctors claiming R131 million.

“The dilemma is that some of the actual projections are not done on the basis of rand terms. They are done on the basis of euros and dollars, and then we have to convert, and then it shoots the figures through the roof.

“There is certainly a need for us to look at that. I certainly hold the view that if you are coming into the country, there has to be terms and conditions to your visa, including but not limited to you having insurance.

“There is no negotiation about this,” he said.

Default judgments

Hlengwa also confirmed that the Department of Transport is already in the process of engaging with the Department of Justice on key areas of assistance to the RAF related to dealing with the issue around RAF default judgments and court-related matters “whether through the establishment of a special tribunal with the status of a high court or through decentralisation mechanisms or an independent adjudicator”.

He added that without any fear of contradiction, they hold the view that the RAF needs to be reformed and reviewed for it to be sustainable and viable to fulfil the core mandates for which it was intended and for it to respond to the prevailing realities of our times.

Read: RAF CEO claims there may be ‘systemic bias’ by judges against fund

“We are already in the process in the department, and we will be expanding our scope of consultations and I am hopeful that I will arrive at a point of the establishment of a RAF advisory panel or forum to assist us to look at these matters in their multifaceted nature because other laws have an impact in terms of how the RAF performs,” Hlengwa said.

He added that this includes, for example, what impact the National Health Insurance will have on the RAF and the road-to-rail programme and the work of the National Logistics Crisis Committee, which will result in the RAF losing fuel levy revenue.

Scopa heard that there is a need to diversify the RAF’s income stream.

Read: Gauteng aims to use RAF medical expenses claims to pay e-toll debt

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