The Road Accident Fund (RAF) has spent more than R10m in a court battle with the auditor-general (AG) over almost three years, with the RAF losing at each turn.
Now parliament’s standing committee on public accounts (Scopa) has written to the RAF asking for documentary evidence so it can make its own assessment on whether the legal challenge is warranted.
AG Tsakani Maluleke issued the RAF with adverse outcomes for three financial years, mainly due to the fund's decision to adopt a new accounting standard — a move that was rejected by the Accounting Standards Board (ASB) and not supported by the National Treasury.
The change in the accounting standards resulted in claims liabilities and claims expenditure being understated.
It has emerged that although the RAF adopted a new social benefit standard on advice from audit firm PwC in 2021, it ignored a recommendation by an accounting firm not to change the standards.
The RAF had sought an opinion from Morar Incorporated, which on April 8 2021 advised the RAF against changing the accounting policy until the ASB had completed the process of developing an “appropriate standard for accounting for social benefits”.
Scopa chair Songezo Zibi said the committee would make its own assessment at the end of the litigation and after receiving further information from the RAF.
“We have requested copies of all internal legal and consultant advice — including [from the] Treasury and the auditor-general — they have received on the matter so we can make our assessment.
“If after considering all the evidence the committee is of the view that it was unwarranted then we may take action which includes the possibility that the responsible officials must cover the costs from their own pocket,” said Zibi.
Despite the RAF losing in the Pretoria high court and the Supreme Court of Appeal (SCA), and spending R10.6m on legal fees, the government agency is pushing ahead with further litigation by petitioning the judge president of the SCA for an appeal.
“Allowing this judgment to stand will simply distort the liability of the RAF,” the fund said in response to questions from the Sunday Times.
The issue was raised when RAF CEO Collins Letsoalo appeared before Scopa on October 16.
“You actually have a responsibility to follow the act and to continue to report in the way the act requires you to,” said DA MP Patrick Atkinson.
You actually have a responsibility to follow the act and to continue to report in the way the act requires you to
— DA MP Patrick Atkinson
“The question to the deputy minister [of transport, Mkhuleko Hlengwa,] is how do you feel having an entity which is not compliant with the law? You have an entity which has failed in their court applications ... How can you allow a subsidiary or an entity reporting to the department of transport to continue in this manner”.
MKP MP Emerald Madlala said the continued litigation was an indication of the government’s failure to intervene in matters involving its institutions when they were at loggerheads.
“Sometimes, because of how vested we are for these institutions to succeed, we may fall into a trap of getting so attached to our views that we want to pursue them until the end. Where we come from we normally say you comply and you complain later, but it does deprive you of the right to pursue what you believe is correct.
“We need these institutions to be compliant, operational and service the people ... This expresses the failure of the government to mediate to an extent that the courts must make a determination, but this is one government and there are experts within the government,” said Madlala.
However, his fellow party member, David Mandla Skosana, said there was a political agenda against Letsoalo, with attempts to remove him.
“I have been watching this matter being ventilated on different platforms. The CEO’s head is on the line, it's political more than anything else. It didn't start with this seventh administration, it started with the sixth administration. I can tell you, they want you out ... we know what is happening behind the scenes,” said Skosana.
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