Creecy supports limit on accident claims amid RAF legal battle with illegal foreigners

Transport Minister Barbara Creecy says there should be a limit on the social benefits paid to foreign nationals by the Road Accident Fund (RAF) as part of compensation claims.

Both legal and undocumented foreign nationals can claim compensation from RAF, which is funded by the fuel levy, if they are injured or killed in road accidents occurring in South Africa.

This is outlined in Section 17(1) of the RAF Act, which grants compensation to “any person”.

Accident victims can seek claims for medical expenses and loss of earnings.

Creecy proposes cap on foreign claims

While briefing Parliament’s Standing Committee on Public Accounts (Scopa) on Tuesday, Creecy stated that she believes there should be a limit on the benefits foreign nationals can claim in damages from the RAF.

 “On the issue of whether foreign nationals should benefit from the fund, I suppose that is a taxation issue because the way the taxation works on this particular fund is that you pay a fuel levy.

“So, if you are buying fuel and you are driving in South Africa I guess you are entitled, by virtue of the fact that you are paying tax, to be compensated.

“But the real question is whether or not, we should be putting a limit on the benefits and my view is that we do need to have a scale of benefits, and we do need to be putting a limit on that scale of benefits,” the minister said.

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RAF CEO Collins Letsoalo has stated that the cost of processing accident claims from foreign nationals is higher than for South African citizens.

Letsoalo informed Scopa last week that the RAF pays out around R3 billion annually to foreign claimants.

The largest payout in RAF history was to Swiss billionaire Joachim Werner Schloss, who received just over R500 million in 2008 after losing an arm and a leg in a motorcycle accident in Cape Town six years earlier.

In another case, three Belgian exchange students from the University of the Witwatersrand are each seeking over R150 million in compensation from the RAF after being injured in a bus accident.

RAF vs illegal foreign nationals

The RAF has been involved in a legal dispute over claims by undocumented foreigners.

In 2022, then-Transport Minister Fikile Mbalula, issued a management directive aimed at excluding illegal foreign nationals from receiving compensation.

The directive introduced minimum requirements for immigrants to claim from the fund, mandating that claimants provide proof of legal entry into South Africa, such as a passport with entry stamps and a valid visa, when submitting the revised RAF Form 1.

After the management directive took effect on 4 July 2022, following its publication in the government gazette, the RAF began refusing to pay claims to undocumented foreign nationals.

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In response, four foreign nationals filed a lawsuit against the RAF and the minister, challenging the “policy decision”.

In March 2024, the Gauteng High Court in Pretoria ruled in favor of the four applicants, stating that RAF and the minister had no authority to issue the directive, as it contradicted Section 17 of the RAF Act.

RAF’s appeal was dismissed in July 2024.

However, the entity was granted special leave to appeal to the Supreme Court of Appeal (SCA) in September.

The date for the case to be heard is unclear.

RAF’s legal battle with Auditor-General

Meanwhile, RAF has also been in court with the Auditor-General.

For three consecutive financial years, the RAF has received adverse audit outcomes, primarily because it adopted a different accounting policy than the one prescribed by the National Treasury.

Both the high court and the SCA ruled in favor of the Auditor-General.

The RAF has since applied to the SCA’s Judge President for a reconsideration of the case.

On Tuesday, Minister Creecy informed Scopa that although RAF preferred and was permitted to use a different accounting policy, it had not received approval from the Accounting Standards Board (ASB) to implement such policy.

“The issue at stake here is that they do not have that permission and this has resulted in an ongoing litigation between themselves and the Auditor-General,” she said.

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The minister expressed her belief that the RAF should withdraw from the legal battle.

“In the RAF situation, we have now lost the third court case. So, the question is not whether we should have taken it [to court] in the first place, but the question is should we go on with this litigation and my view is we should not,” Creecy said.

RAF refuses to use the Generally Recognised Accounting Practice (GRAP) mandated by the Public Finance Management Act (PFMA) for government entities.

Instead, it uses the International Public Sector Accounting Standards (IPSAS) 42, which differs from GRAP as its accounting standard.