The standing committee on public accounts (Scopa) wants to recover the R11m that the Road Accident Fund (RAF) spent taking the Auditor-General of South Africa (AG) to court disputing the AG’s accounting standards.
The committee wants the RAF board members who took the decision to go to court to pay the money from their own pockets. This is one of the outcomes of Scopa’s inquiry into the fund.
The inquiry covered wide-ranging issues at the RAF including procurement processes when awarding two media contracts worth R1bn, one to Dzinge Productions, which hosted a staff awards ceremony costing nearly R4m.
Scopa also looked into the more 50 employees who were placed on paid suspensions for a period exceeding three years in which RAF spent R119m on legal costs.
This was clearly an artificial manipulation of the financial results.
— Draft report
The RAF also litigated against the findings of the AG, which were that the entity had understated claims liabilities by more than R300bn to avoid appearing as being insolvent.
Scopa found that RAF’s litigation against the AG was not necessary.
“Taking the AG to court was a wasteful and unnecessary expenditure. The AG is not responsible for setting accounting standards. Those responsible for the decision to go to court must be held accountable for the wasteful expenditure,” said Scopa chairperson Songezo Zibi on Tuesday.
Scopa wants the funds spent during the legal process to be recovered in full and is seeking legal advice about how to go about this.
“The committee is of the view that the funds used amount to fruitless and wasteful expenditure and must be recovered from those responsible for the decision to go to court,” said Zibi.
“The committee will now seek legal advice on who should be responsible for that expenditure in terms of the RAF Act and the Public Finance Management Act.”
The board members will be given an opportunity to comment on the finding and recommendation.
The committee’s draft report placed the now suspended CEO Collins Letsoalo at the centre of the scandal, which saw the RAF change its accounting policy and how it was eventually approved by the board.
“It is clear that the primary rationale for the change in accounting policy was for purposes of securing loans and a revolving debt facility at favourable interest rates as stated in Para 12.2 of the RAF’s answering affidavit (dated 22 January 2022) in its litigation with the Agsa,” reads the draft report.
The committee is of the view that the funds used amount to fruitless and wasteful expenditure and must be recovered from those responsible for the decision to go to court
— Scopa chairperson Songezo Zibi
“In the RAF vs Agsa Gauteng high court judgment of February 24 2022 the court similarly highlighted that the intention of the RAF management in adopting Ipsas 42 was dubious as it aimed to reduce liabilities to raise loans from prospective investors.”
Scopa also noted that it appears that the ministry of transport in 2021, then under Fikile Mbalula, had directed the RAF board to reduce its liabilities that amounted to R322bn at the time.
“The change in accounting policy dramatically reduced the liabilities on the balance sheet of the RAF. Only claims that had been fully assessed and quantified, and where an offer of settlement had been made to the claimant, were treated as a liability on the balance sheet,” reads the draft report.
“All other reasonably anticipated claims were ignored, including those reported but still under investigation or quantification and the incurred-but-not-reported claims.”
The Scopa draft report says the annual financial statements of 2020/21 showed there was a dramatic reduction of the liabilities by over R300bn.
“This was clearly an artificial manipulation of the financial results,” the draft report states.
The RAF switched to the International Public Sector Accounting Standards (Ipsas) instead of the prescribed Generally Recognised Accounting Practice (Grap) in the 2020/21 financial year, which resulted in the fund writing off more than R300bn in liabilities. The Auditor-General argued this new policy did not accurately reflect the fund’s true financial position, leading to “disclaimer” audit opinions — the worst possible result — for multiple consecutive years.
Auditor-General Tsakani Maluleke told parliament that the RAF’s use of Ipsas 42 was improper because it is not approved for use in South Africa and differs significantly from the prescribed Grap standards.
By the time the entity abandoned the matter in court in January 2026, it had already cost the fund over R11m in legal fees.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.