Parliament uncovering the rot in the R48 billion Road Accident Fund

The Standing Committee on Public Accounts (SCOPA) has been uncovering significant concerns relating to the financial management, losses and maladministration of the Road Accident Fund (RAF).

“It’s like a black hole – no one knows how deep it is,” said ActionSA MP Alan Beesley, calling it “government’s concealed rot.”

The RAF raises approximately R48 billion annually, primarily through a levy on fuel sales. 

This revenue is used to pay out claims, with about 60% going to claimants and the remaining 40% covering administrative costs. 

However, it has long been plagued by allegations of maladministration, as financial information supplied has been unreliable and incomplete for audits to be completed.

The Parliamentary probe began on 6 October to demand accurate and truthful information about the fund’s finances and operations. 

The committee received over 100 submissions from lawyers, doctors, RAF staff, and victims and is now calling on these parties to make statements in the committee to uncover the extent of the rot in the RAF.

Allegations include inadequate background checks on senior executives with histories of reckless financial decisions, an average delay in claims processing of 4 years, and financial mismanagement.

In the latest parliamentary hearings, former Chief Actuary of the RAF, Itayi Charakupa, said there is “no logical reason why” the RAF should underreport its liabilities, as has been uncovered. 

“Whether it is R1 trillion or R1, we are a public entity, we’re not raising funding. It is crucial for decision makers to know the RAF’s accurate state of affairs,” he said.

The RAF allegedly spent a reckless R10 million on personal security for now-suspended CEO Collins Letsoalo, including hotel stays for bodyguards.

The entity has received an adverse or disclaimed audit opinion for the last five years from the Auditor General of South Africa (AGSA).

As of the 2024/2025 financial year, the RAF is running on a R27.8 million deficit. This amount has been ballooning for over ten years.

Hole in the RAF is unknown

Important state-owned entity which has been technically insolvent for years

The inquiry and unfavourable audit opinions are a result of the RAF using an accounting system, IPSAS 42, that is not sanctioned by the AGSA, resulting in the misstatement of outstanding claims liabilities and claims expenditure.

This includes claims by road accident victims that have been registered but have not yet been paid. 

After adopting the unlawful accounting principle, the RAF’s stated claims liability dropped from R330 billion to R27 billion in 2021.

Beesley said that they have attempted to unravel the debt restructuring and do the calculations to determine the entity’s unrecorded liabilities, amounting to over R500 billion.

This is nearly one-fifth of the National Government’s entire annual budget. This is only an estimation, as the AGSA has confirmed that the actual amount cannot be estimated. 

“My sense is that the actual hole in the RAF is massive and unknown and a huge expense to South African taxpayers,” Beesley told Newsday. 

“It’s like a black hole – no one knows how deep it is,” he added. South African taxpayers fund the RAF through a R2.18 levy on every litre of fuel. 

Estimated R500 billion in financial misstatements

Beesley explains how this hole was created: through both the unauthorised and non-compliant accounting standards when preparing financial statements, as well as unlawfully changing the process for registering claims. 

Despite a budget of over R40 billion, the RAF has drastically reduced the number of claims it has granted for victims of road accidents.

Of those who have claimed successfully, over 1 million are facing payment delays.

New RAF paperwork was introduced in 2022, which expanded the RAF claim form from 12 to 24 pages. The new document has been regarded as unlawful by South African courts.

The committee heard last week that claimants are rarely able to complete the paperwork without the assistance of an attorney. 

Since the form was introduced, the RAF has received 105,039 claims, of which 72% were rejected. The number of registered claims has dropped from 300,000 in 2021 to under 100,000 in the last financial year.

“Taken together, these accounting and administrative manipulations have concealed more than R500 billion in unrecorded liabilities, one of the most serious financial misstatements by any state entity in democratic South Africa,” Beesley said. 

Additionally, the committee said that “numerous whistleblower accounts” have reported supply chain irregularities involving more than R1 billion. 

A document seen by Newsday shows that the RAF, despite operating at a significant deficit and being under investigation, held an awards ceremony in March 2025 that cost a whopping R4 million. 

Of the numerous concerns raised, SCOPA chair Songezo Zibi noted that the RAF told the inquiry that they don’t assess their marketing agency’s procurement practices on a R500 million account.

This week, the inquiry has focused on hearing evidence relating to the financial, procurement and governance affairs of the fund.

The committee has heard input from the Sunshine Hospital, which is owed R300 million by the RAF and has since been forced to close. 

Ken Ford from the Hospital said that, as of 29 September 2025, the hospital issued 6,285 summonses against the RAF and had obtained 647 judgments totalling R180 million. 

The legal cost of these proceedings for the RAF amounted to R23 million in fruitless and wasteful expenditure. 

The inquiry is hearing evidence from the fund’s former acting Chief Financial Officer Victor Songelwa and Chief Actuary, Itayi Charakupa. 

The finance experts have revealed that the average payout to claimants has been increasing far above inflation rates, despite the number of successful claimants having drastically decreased. 

The average value per claim has more than doubled in six years, from R111,072 in 2018 to R286,825 in 2024. This is while the number of claims dropped from 311,004 to 159,122 during the same time.

Zibi said that the current Road Accident Fund Act does not distinguish between South Africans and non-South Africans; anyone injured in a non-fault accident can claim from the RAF.

He proposes changing the law to require medical insurance for visitors, similar to the European Union visa requirements. A RABS Bill to address this is expected to be introduced in Parliament by year-end.

The RAF and Auditor General disagreement

In defence, the RAF has said that its poor audit outcomes have been caused by a disagreement with the Auditor General over its classification.

The RAF says that it is a “social benefit fund” and therefore entitled to use non-standard accounting. It claims this better reflects the fund’s mandate to compensate victims without profitability metrics.

The RAF criticised its funding model, reliant on fuel levies, as “outdated” and said this cannot cover rising claims or account for inflation. According to the RAF, an effort has been made to clear the backlog of claims.

The committee has been sceptical of these defences. Zibi has called the fund “broken” and said the inquiry will be potentially “precedent-setting” for accountability.