The Law Firms Used to Rake Billions Road Accident Fund claims are inconsistent with the new payment mechanism implemented to improve finances and stop corruption, the entity said Friday.
The entity is seeking to pay the claimants directly through the Road Accident Compensation Act (RABS) pending in Parliament portfolio committee transport† The new lawsuits have not been well received by the law firms that file claims on behalf of traffic accident victims.
The board it took over in 2019 got the nod to adopt a new business model to give the entity financial stability, said Transport Minister Fikile Mbalula.
“We’ve been ripped off… we need to put this right through the law. Billions are paid to lawyers and only half of them reach the actual claimants of the RAF. See all those people driving fancy cars? That’s the situation because people who need the money don’t get it.”
RAF CEO Collins Letsoalo noted that it was not just lawyers fighting the RAF, but also medical professionals.
“The backlash is huge. Medical professionals charged us five times more than medical aid schemes for procedures because we never had our own rates.
“Our predecessors had no applicable rates, so we published our own rates to make everything in line with the market. The backlash from law firms has led to fake news, the seizure of RAF assets… they even started to attach assets before the 180-day grace period we agreed upon.”
In cleaning up the rot and corruption that has plagued the entity internally in recent years, the RAF has so far laid off 80 staff responsible for processing claims.
“Corruption cannot thwart you without tackling the insiders, others just keep resigning. Some simply ignored certain applications and made no payments, while some were paid to speed up payments,” Letsoalo said.
Dependent on fuel taxes to meet its obligations, the RAF had an accumulated deficit of R262.2 billion in 2019.
Collusion between lawyers and staffers and false claims rocked the RAF, leaving the entity in the red.
This came after AG issued a disclaimer to the RAF after checking its books. According to the AG, RAF has underestimated its commitments by R300 billion in 2021 as a result of the move to a new accounting system.
Letsoalo said the lawsuit was about the accounting model and nothing else.
“The new accounting standard says management must use its own judgment, and we have done so. We made a decision as people who know finance and accounting…that’s the only complaint we have at AG. Our opinion is Grap3 [accounting system] allows us to do this… we are not at war with the AG, we agree and work together on governance and accountability.”
Mbalula said he has asked the AG’s office to “take the matter to court” and resolve it amicably.
“It’s a shame that this is all because of the new accounting model, we have to put it right. It is an issue that must be rectified without stepping on each other’s toes and by understanding the mandate of the AG.”