Law firms on warpath against RAF over new payment system

The law firms that were used to rake in billions in Road Accident Fund claims are up in arms against the new payment mechanism implemented to improve finances and stop corruption, the entity said on Friday.

The entity seeks to pay claimants directly through the Road Accident Benefit Scheme Bill (RABS) that is before Parliament’s portfolio committee on transport. The new processes haven’t been well received by the law firms that lodge claims on behalf of road accident victims.

The board that took over in 2019 was given the nod to adopt a new business model to bring the entity to financial stability, said Transport Minister Fikile Mbalula.

“We’ve been ripped off… we need to straighten these up through the law. Billions are paid to lawyers and only half of that reach the actual RAF claimants. Do you see all these people driving nice cars? That is the situation because people who need the money do not receive it.”

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RAF CEO Collins Letsoalo remarked that it was not only lawyers fighting RAF, but medical professionals.

“The backlash is huge. Medical professionals used to charge us five times more than they charge medical aid schemes for procedures because we never had our own tariffs in place.

“Our predecessors did not have applicable tariffs, and so we published our own tariffs to bring everything in line with the market. The backlash from law firms has taken to fake news, the attaching of RAF assets… they even started to attach assets before the 180 days grace period we agreed upon.”

In cleaning up the rot and corruption internally that has beset the entity in recent years, so far, RAF has fired 80 employees in charge of processing claims.

“You cannot thwart corruption without dealing with those inside, others just keep on resigning. Some of them simply ignored certain applications and didn’t make payments, while some were paid to fast track payments,” Letsoalo said.

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Dependent on fuel levies to meet its liabilities, RAF had an accumulated deficit of R262.2 billion in 2019.

Collusion between lawyers and staffers and false claims rocked RAF, leaving the entity in the red.

A protracted litigation with the Auditor-General (AG) over audit reports was thrown out of court last month, according to News24.

This came after AG issued RAF with a disclaimer opinion after auditing its books. According to the AG, RAF understated its liabilities by R300 billion in 2021 following the switch to a new accounting system.

Letsoalo said the litigation was over the accounting model and nothing else.

“The new accounting standard says management shall use own judgement, and we did exactly that. We took a decision as people that understand finance and accounting… that’s the only gripe we have with AG. Our view is Grap3 [accounting system] allows us to do so…we are not in a 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 out of the courts” and have it resolved amicably.

“It is unfortunate that all these is because of the new accounting model, we need to straighten it out. It’s a matter that needs straightening out without stepping on each others toes and by understanding the mandate of the AG.”