Expert accuses RAF of misrepresenting itself and its purpose

An expert says the Road Accident Fund (RAF) is misrepresenting itself and its purpose to avoid accountability while denying justice to vulnerable victims.

However, the RAF says the expert is a former employee who set up his business based on the fund’s “inefficiencies.”

Gert Nel from Gert Nel Inc., a law firm specialising in personal injury cases, including claims against the RAF, calls on people to imagine an institution charged with compensating road crash victims that deliberately distorts its purpose by bypassing legal obligations and operating in blatant defiance of court rulings.

“This is the reality of the Road Accident Fund (RAF) whose leadership has unlawfully redefined its purpose – a calculated misrepresentation designed to evade accountability while systematically denying justice to thousands of vulnerable victims,” Nel says.

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Social insurance vs social benefit scheme

He explains that the cornerstone of the RAF’s defiance lies in its claim that it operates as a “social benefit scheme”. By adopting this label, CEO Collins Letsoalo argues that the RAF is exempt from the rigorous reporting requirements applied to social insurance entities. However, this assertion has no legal basis.

“South Africa’s courts, including rulings from a full bench, have consistently found that the RAF is by design a social insurance scheme. Its purpose, as defined in the Road Accident Fund Act, is to compensate victims of motor vehicle accidents for loss and damages, a mandate rooted in insurance principles.”

Nel says the distinction is critical as social insurance entities, like the RAF, must account for contingent liabilities arising from the date of the road crash, whereas a social benefit standard can manipulate the timing and nature of liability.

A contingent liability is a liability or a potential loss that may occur in the future depending on the outcome of a specific event, such as potential lawsuits.

Nel says that by misclassifying itself, the RAF’s leadership bypassed the financial reporting requirements and adopted IPSAS 42, an accounting standard intended for social benefit schemes.

“This allowed the RAF to understate its liabilities, slashing reported obligations from R300 billion to R30 billion almost overnight and creating a deceptive impression of financial stability. Despite the courts ruling this approach as unlawful, the RAF remains steadfast in its defiance.”

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Consequences of IPSAS 42 adoption

According to Nel, adopting IPSAS 42 does more than distort liabilities. “It undermines trust and transparency. Under this standard, the RAF only recognises liabilities when claims meet strict compliance requirements. This effectively erases its obligations to countless victims.”

He points out that during a presentation to the standing committee on public accounts (Scopa), Letsoalo attempted to justify the adoption of IPSAS 42 by citing irrelevant judgements and claiming that the RAF operates as a “social benefit scheme”.

“Scopa promptly challenged this argument, highlighting the absence of legal precedent for such a classification. The presentation revealed the extent to which RAF’s leadership will defend its unlawful practices.”

Nel says oversight bodies, including the National Treasury and the Accounting Standards Board, condemned the RAF’s actions, reiterating that its activities align with social insurance, not social benefits. Still, despite these clear directives, the RAF’s leadership continues to prioritise optics over accountability, perpetuating a false narrative of compliance.

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Board Notice 271 of 2022 introduced onerous requirements

“The RAF’s misrepresentation is further reinforced by Board Notice 271 of 2022 that introduced onerous documentary requirements for claimants that are inconsistent with the RAF Act. For many, the costs of obtaining these documents exceed their financial means, while others lack the knowledge to navigate the process.

“The result? A staggering 97% of claims are rejected as “non-compliant”, leaving only 3% eligible for processing, which compliments the IPSAS 42 approach.”

Nel points out that South Africa’s courts already declared Board Notice 271 of 2022 unlawful because it creates a significant barrier to accessing the RAF, but the fund continues to enforce it.

“The RAF’s defiance of court orders reveals a troubling culture of impunity. From its refusal to abandon IPSAS 42 to its continued enforcement of Board Notice 271, the RAF’s leadership demonstrates a blatant disregard for the rule of law. This defiance erodes public trust and leaves road crash victims without hope.”

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Devastating consequences of “unlawful reforms”

The consequences of these unlawful reforms are devastating, Nel says. “Not only is it impossible to determine what the RAF’s actual liabilities are, but they are also excluding deserving victims. Claimants who succeed in claiming directly from the RAF are victimised, and many are forced to accept offers far below fair settlement.

“These reforms serve the narrative of ‘high performance’ promoted by the RAF’s leadership, masking its actual failure to fulfil its mandate. Arguably, this explains the CEO and executive’s unwavering determination to uphold unlawful reforms as they create the illusion of reduced claim amounts, lower legal costs and faster settlements.”

Nel warns that in reality, the RAF’s performance tells an entirely different story, marked by inefficiencies, legal defiance and the systematic denial of justice to victims.

“The RAF’s failures are not merely technical. They represent a profound betrayal of South Africans who fund the institution through the fuel levy.”

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Immediate action required

Nel says immediate action is required in the form of:

• Adhering to the statutory mandate: The RAF must operate transparently as a social insurance entity, attend to claims timeously, abide by the RAF Act and apply appropriate accounting standards.
• Repealing unlawful reforms: Repeal Board Notice 271 of 2022 and other directives that are unlawful to restore access to justice.
• Paying lawful claims: With an investment income growing by 145%, there is no reason why payments to deserving claimants should be delayed.
• Investigating the leadership’s accountability: Investigate the ‘fictional’ high performance by the CEO and the executive, particularly given the material uncertainty of liabilities and the CEO’s R9.4 million remuneration and R2.8 million bonus in 2024, amidst a R5 billion deficit.

Nel says the time has come for South Africa’s leadership to take decisive action and restore order and accountability to the RAF. “Without immediate intervention, the RAF will become yet another failed state-owned entity.

“However, this time, the stakes are tragically higher as fuel levy payers’ money is wasted and real lives and livelihoods are at risk, with road crash victims bearing the brunt of systemic inefficiency and bureaucratic indifference.”

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RAF blames unethical attorneys

Asked to respond to Nel’s comments, RAF head of corporate communications, McIntosh Polela, says the case of the legality of the Board Notice 271 is still in court. “However, we would like to elaborate on the purpose of the Board Notice, which is to obtain all claim documents so that claims can be assessed within a period of 120 days.

“Before this Board Notice, unethical attorneys used to submit claims with outstanding documents and this would prolong the claim assessment. At some point, the RAF had claims that were open for 8 years that could not be assessed due to outstanding documents.”

Polela adds that it is important to note that Nel is a former employee of the RAF “who set up his business based on the inefficiencies of the Fund”.

“This is a continued crusade aimed at attacking the current transformation of the RAF because the status quo benefits Mr Nel,” Polela says.