Johannesburg - Transport Minister Fikile Mbalula has denied reports that the Road Accident Fund (RAF) has hidden R300 billion.
Mbalula together with the non-executive members of the Board and RAF CEO Collins Letsoalo, briefed the media on Friday on the agency’s financial position and interventions made to stabilise it.
“A lot of things are being written about the RAF that they are hiding R300 billion, they are running a spaza-shop, they are running something that they don't understand what they are doing. But those who have access to the media are bad mouthing, but we are not bad mouthing, we are here to account,” Mbalula said.
He added: “I have said to them (RAF) we are running this thing on behalf of the people of South Africa, when we are questioned we must not run away, we must answer. We don’t work under anonymous report sources.”
Mbalula said the entity was established to provide compensation for loss or damage wrongfully caused on the road. The compensation is to provide relief to those whose livelihoods have been disrupted, or lost loved ones as a consequence of road accidents.
Mbalula said the final report of Judge Kathy Satchwell’s Commission on the RAF in 2002, had set the scene for a policy review in relation to compensation resulting from road crashes.
“The commission was incisive on its analysis of the RAF scheme and its predecessors. Over the years despite legislative interventions and appointment of seven commissions of inquiry the system has failed to achieve its objectives.
“One of the reasons for the failure of the system is that since its commencement the basis of the compensation system introduced by the motor vehicle accident act of 1984 has remained relatively unchanged despite numerous legislative interventions to change certain liability provisions in the law.
“The RAF currently administers the fourth based MVA compensation system which it inherited from its predecessors in terms of the RAF Act,” Mbalula said.
He said the RAF pays compensation to injured road users for personal bodily injuries and pays compensation to dependants of bread-winners that have been killed in car accidents.
Mbalula said the RAF has operated on a financially unsustainable model for decades. He said it had a debt that is unaccounted for.
“Letsoalo has been fighting battles, I took him as one of the best I have in the department of transport because I know he will get the job done. He's not been walking on roses, he is fighting, he's been fought but the battle is engaging in with the board, they understand it is on behalf of South Africans and the poorest of the poor.,” he said.
He said there had been an increasing administrative cost of the RAF scheme.
“Of the revenue RAF collects, more than R17 billion, or 40% of this goes to administrative costs, with only R26 billion, or 60% actually received by claimants. Currently, the RAF’s biggest cost driver was the number of road accidents that occur on public roads daily.
“Bringing RAF back to financial stability requires both a regulatory overhaul and operational improvement. The regulatory overhaul is mandated by the RABS (Road Accident Benefit Scheme) policy which requires of us to complete the transformation of the RAF into a benefit scheme that is fully integrated into the broader social security net
“We have given the green light to the board to move with speed in adopting a new business operating model, and it is currently seized with its implementation,” Mbalula said
Mbalula said to illustrate the quantum of the challenge that stifles the RAF from the effective implementation of its mandate, of the R41 billion fuel levy it receives, R10.6 billion goes towards legal costs, some of the injured people don't even get the lions share of this money, it goes to lawyers.
“We are straightening that up in terms of the law and it is a mandate that I have given to the board to implement, it is for the people of South Africa. We have been ripped off and ripping ourselves off through a scheme we need to straighten up,” he said.
Political Bureau