Move to shut down Road Accident Fund

Attorneys want the high court to wind up insolvent fund.
Out of time? Image: Shutterstock

The Road Accident Fund’s (RAF) days could be numbered. This is if Maponya Attorneys gets its way, as it has applied to the Gauteng High Court for the state entity, which compensates victims of motor vehicle accidents, to be wound-up.

Maponya, which was appointed to the fund’s panel in December 2014, says given the financial peril the RAF is in, a court-ordered winding-up is the fairest outcome for all stakeholders. As things stand, the fund is insolvent at its total liabilities exceeded its assets by R262.11 billion according to its 2018/19 annual report.

It’s gotten worse since then too, as its accumulated deficit is expected to increase from R329.7 billion in 2019/20 to R593.1 billion in 2022/23 according to a presentation to parliament in June.

The deficit has risen on the back of a multitude of issues. In recent years it has encouraged people, who would have given little thought about making claims against the fund, to do so. There have also been accusations that some attorneys were overcharging for their services, and that the fuel levy is an inadequate funding mechanism.

Read: Road Accident Fund hits the wall

Fire sale

The RAF’s funding issues have led to creditors making 560 attachments to its bank accounts in the 2018/19 financial year. Maponya says several creditors, who are owed R97 million, have already attached movable assets seized at the fund’s office in Centurion in an attempt to sell them off.

Maponya is owed R20.6 million and it fears that in the rush of civil claims against the RAF, it and other creditors could lose out to those who have already attached assets. To prevent this from happening, it asked the Gauteng High Court on August 26, to unwind it under the provisions of the Insolvency Act.

In doing so, Maponya says it will substitute individual debt collecting remedies to one that is fairer to all creditors. Doing it this way will also formalise the involvement of relevant trade unions, employees and the tax authorities.

The RAF has yet to respond to questions on whether it will oppose the application. It did point out in its 2019/20 annual performance plan that the financial issues around the RAF are nothing new as it has been insolvent since 1981.

The fund will have to deliver answering papers by the close of business on September 28.

Running out of road

The government has long seen the structure of the RAF as unsound, and this is why it wants to introduce the Road Accident Benefit Scheme (RABS) to replace it. Under RABS, the aim is to expand access to benefits by removing the requirement to establish who was at ‘fault’ to qualify for benefits.

RABS also reduces the need for legal representation. “Equally, the RABS will ensure that benefits intended for road crash victims and their dependents are in fact received by the intended beneficiaries, in contrast to the RAF where numerous intermediaries often unfairly benefit at the expense of the claimant,” according to the transport department’s 2019/20 annual performance plan.

Read: Parliament bins Road Accident Benefit Scheme

With a new structure on the way, the government sees no need to unwind the RAF. “While we as the Ministry of Transport concede that the debts of the RAF are substantial and that the turnaround time for plaintiffs’ payouts may leave much to be desired, we are of the view that the RAF’s financial obligations are not insurmountable if the necessary reforms that are currently underway are fully implemented,” the transport department said in a statement.

The department also points out that strides have been made in getting the RAF’s house in order, like increasing contribution of the fuel levy, reducing administrative costs such as those incurred through legal fees, which cost the RAF about R13 billion in the previous financial year.

“Taking the above-mentioned reasons into consideration, we believe that any attempt to have the RAF wound up, is short-sighted and narrow-minded. We are ready to defend our position in court if needs be.”

It is, however, unlikely that the RAF would not have been in this position if parliament had passed the RABS bill on December 6, 2018. Back then, according to the department’s 2019/20 annual performance plan, a vote on the bill was scheduled but had to be postponed as there were too few MPs to form a quorum.

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Another state agency run into the ground and another feather in the cap of the cANCer.

Yawn.

Did you miss the part about the RAF being insolvent since 1981?

Technically insolvent – that is if all claims, as estimated, are to be paid out immediately – but it takes years to complete claims.
But, the fund has been skimmed by untrustworthy lawyers – – – some, called Bobroff skimmed their clients as well and living large in Australia with their loot.

Ho won earth did this happen? Billions and billions of Rand in the red? How? Is there no accountability? Were the actuaries drunk? R13 billion in legal fees? You can hire more than 10 000 well paid lawyers for that ..per year?

And the reason no new bill was passed in 2018-too few MPs in parliament!! No follow up for a new date when the obese comrades suffering from narcolepsy return from a four hour lunch?

To call SA a failed state would be a compliment!

Fake news : lawyers would NEVER shut down their favorite cash cow

With figures like RAF’s deficit near R330bn. And owing R97mil to certain creditors….sounds like a “mini SAA” in the making.

Let me guess what the ANC govt will do:

Like SAA, they’ll simply try to close the current fund (along with creditors’ claims), and…wait for it…..START A NEW airline, ..I mean…a FUND!!

Changing the name from RAF to RABS would help about as much as changing the name ANC to ANB. It will still be the same geniuses running it.

Let’s hope the price of fuel will go down significantly.

Not likely — ANC need bucks !!

This SOE has been under the radar for far too long considering the fraud and corruption that has taken place. I believe the RAF will show that Eskom looks like a puppy, with the Billions has been looted for decades from the from the RAF. Nothing has been done about it!!!! New ceo has a very bad history and reputation and also gave himself like a 1000% salary increase. Please liquidate asap!!!!!!

By the way, great qualifications for a ceo:
Chief Executive Officer​: Phutjane Collins Letsoalo​​
​QUALIFICATIONS​ ​
Matric certificate, B.Com (Economics), Advanced Diploma in Central Banking, Diploma in Treasury Management and Trade Finance and CAIB (SA), Post Graduate Diploma in Management

Yes, good on the CV but means nothing against the well oiled corruption machinery, of both private and public sector cabals.

“There have also been accusations that some attorneys were overcharging for their services…”

No! Really?

Maponya Incorporated has, in its own court papers, ably demonstrated the old adage that “A Man Who Is His Own Lawyer Has A Fool for a Client”

The final paragraph states: “Maponya Inc. will accordingly request the honourable court to direct the Master to appoint SUMAIYA ABDOOL GAFAAR KHAMISSA as the/a provisional liquidator.”

It then proceeds to append her resume.

There is definitely the stench of decomposing rat surrounding this application.

Firstly, Ms KHAMISSA knows as a liquidator that a judge cannot direct the Master to appoint her.

Secondly, in Ex parte: Master of the High Court of South Africa (North Gauteng) (2011 (5) SA 311 (GNP)) [2011] ZAGPPHC 105; 28042/11 (27 June 2011), Judge Eberhard Bertelsmann, the doyen of South African insolvency law states:

“THE ROLE OF OFFICERS OF THIS COURT

43. Both the Master and the Johannesburg Society of Advocates have expressed stern criticism of the conduct of counsel and attorneys who were responsible for moving orders for the provisional sequestration or liquidation of the relevant respondents that included prayers for the appointment of a particular individual to the office of provisional trustee or liquidator, without drawing the court’s attention to the correct interpretation of the statute or the authorities that are against the granting of such relief. They emphasised that practitioners are obliged to keep themselves up to date with the recent authorities in their field and to point them out to the court, particularly if they do not support the result contended for by the practitioner. No attorney or advocate may ever knowingly mislead the court or withhold relevant information that may affect the courts decision.”

“THE ORDER

1. It is declared that the Master of the High Court of South Africa is the only official authorised to appoint

1.1 1 trustees and provisional trustees of sequestrated and provisionally sequestrated estates;
1.1.2 liquidators and provisional liquidators of companies and close corporations in liquidation or provisional liquidation; and
1.1.3 judicial managers and provisional judicial managers of companies in judicial management and provisional judicial management; and

1.2 No Judge of the High Court of South Africa has authority or jurisdiction to effect any appointment of any person to any of the positions referred to in par 1, nor to make any recommendations to the Master in respect of any appointment to any of these positions.”

This all lends credence to my long held view that RAF plaintiff attorneys are merely ‘claims handlers’ and not real lawyers.

I have dealt with Maponya Attorneys in the past in both RAF and non-RAF matters…they are not exactly the creme de la creme to be generous; they are also proceeding on the basis/assumption that the RAF is a company in terms of the old 1973 Act and new 2008 Act when it is in fact a creature of statute governed by (at present) the RAF Act of 1996 and RAF Amendment Act of 2005 (!)

Pre-94 the insurance companies ran the RAF effectively.

Dep Minister of Transport Jeremy Cronin was approached and asked why the insurance companies do not do so again.

He gave the ideological answer – the State cannot hand institutions back to the private sector. A R200 bn shortfall is not enough to convince him how wrong he was.

This country is paying a high price for ideology.

Is this the same Sumaiya Abdool Khamissa, who was removed by the Master a while ago and who got appointments from the Master through family members?

Go back 60 years-a couple of insurers went insovent at least partl;y due to insuring the risks. Much has changed since but cost of claims and fees remains.

A solution may be to legislate the amounts of compensation (this is in fact the case already),(other African States have a detailed code) deny claims againt a ‘passenger’s driver’ (potential source of collusion and fraud) but not against other motorists (partly the case already) and hand over to private insurers to manage. Premiums would replace fuel levy.

A difficulty though is non-compliance by motorists – perhaps add premium to Licence Fees? (This was also proposed some years ago).

There is no solution to the monumental deficit in the RAF, however other than throwing good capital into the gravy. It is increasing and has been for many, many years.

If RAF is in such a condition. NHI is going to be worse.

These people talk about a ” Billijon” as if it is fifty Rand.

It does not make sense to have the RAF in these economic times.

If the RAF is removed, the fuel price will drop significantly and help the economy.

Bin the RAF. Make private insurance compulsory for MVA damages (vehicle, self and third party). Let the markets set the rates. But this isn’t a Marxist doctrine so will never happen

If you had to spend ONE billion over 20 years then it would equate to

1. R 136 892.53 per day, every day.
2. R 5 703.85 and hour, 24×7.

One billion here, one billion there, soon we’re talking about real money.

“Maponya says several creditors, who are owed R97 million, have already attached movable assets seized at the fund’s office in Centurion in an attempt to sell them off.”

What was wrong with the old 3rd Party insurance system? No cadres involved?

Sooner or later someone is going to attach the Union Buildings. But hey! Where have we seen the post-revolutionary collapses of state-owned enterprises? Russia, Cuba, Venezuela, Mozambique, Zimbabwe … one would think they would learn from history, but I suppose the lure of free money is just too delicious.

Why not take the RAF , Eskom , SAA , Denel , SABC , UIF , the NHI , and about hundreds of insolvent Municipalities melt it together and create one big shining lump as ANC monument ?

If the fuel taxes get adjuster accordingly (R3.30+ per litre now?) Then I say good riddance.
As it is this levy will just get highjacked by Loothuli House.

Time to let it die but cut the fuel levy too. Amount drivers save can easily be used to finance compulsory vehicle insurance instead and likely a bit left over in our wallets.

Typical scenario:

Injured suffers back injury after accident.
Lawyer claims insane amount; citing other complications in the process and future care or a lack of ability to work.
The public prosecutor agrees to these “outrages” claims in court.

Case closed.

Question: Should the judge step in?

It has happened in the past. Judge Eberhard Bertelsman has previously criticized attorneys for the plaintiff and defendant and even went as far as ordering that neither attorneys in the matter receive any fees.

Wouldnt car insurance help to alleviate this problem? This was just a stop gap for pedestrians. Again this is a policing issue. With no law enforcement there is no law.

End of comments.

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