As a result of its decision to revert to its previous accounting standard.
The Road Accident Fund (RAF) has confirmed that its liabilities could increase by between R300 billion and R400 billion because of its decision to revert to its previous South African accounting standard.
But it denies that it has “hidden” liabilities of R230 billion from about 80 000 legitimate claims that have not been registered on the RAF’s system because of the use of a new claim form.
RAF interim chair Kenneth Brown told Moneyweb in an exclusive interview at the weekend the fund is continuing to use the RAF1 Form for claims and has a case pending at the Supreme Court of Appeal (SCA) about the use of this form.
He said the fund’s liabilities because of the use of a different accounting standard is “anybody’s guess but somewhere between R300 billion and R400 billion”.
“We have indicated to the Auditor-General [AG] that we are going back to the South African standard and are engaging with National Treasury in measuring the extent of that liability,” he said.
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Current accounting standard
The RAF adopted a different accounting standard during April 2021, resulting in its liabilities plunging from R327 billion in its 2019/20 financial year to R34 billion in its 2020/21 financial, and the AG issuing a disclaimer of these financial results.
The RAF unsuccessfully embarked on legal action against the AG to reverse the disclaimer.
Brown said there is another RAF liability of about R40 billion the fund needs to resolve – “a big chunk” of which relates to default high court judgments.
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RAF ‘operating outside the law’ under Creecy – Aprav
Brown’s comments follow the Association for the Protection of Road Accident Victims (Aprav) stating that parliament’s Standing Committee of Public Accounts (Scopa) has confirmed the RAF has been operating outside the law under Minister of Transport Barbara Creecy’s watch.
Aprav legal advisor and spokesperson Gert Nel said testimony before Scopa revealed the RAF had illegally changed its accounting standards and applied an unlawful board notice, manipulated liabilities by classifying valid claims as “non-compliant” – and did so with full ministerial awareness despite court rulings declaring the framework unlawful.
Nel said the result is staggering, with 80 000 legitimate claims erased, R230 billion in hidden liabilities, and hundreds of thousands of South Africans denied justice.
He said Aprav supports the interventions proposed during the Scopa hearings, including that
- The RAF must without delay withdraw the unlawful RAF1 Form Board Notice;
- Return to the 2008 RAF Act and original claims procedures;
- Reregister all unlawfully rejected claims; and
- Allocate “link numbers” to ensure payment.
Scopa member Patrick Atkinson from the Democratic Alliance (DA) said the RAF1 Form, which stems from a RAF Board Notice adopted in 2022, requires road accident victims to supply a long list of documents – far more than required by the RAF Act – for their claim to be accepted.
Atkinson said this meant that thousands of claimants have had their claim rejected despite them complying with the law and that, by denying the claims of rightful claimants, the RAF is accumulating billions of rands in claims liabilities that are not recorded anywhere.
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Unconstitutional, unlawful, invalid
The High Court in Pretoria in November 2023 declared this RAF board notice unconstitutional, unlawful and invalid, and also set aside a number of management directives adopted and implemented by the fund, together with a substituted claims form.
It said the RAF exceeded its powers in issuing and applying the Board Notice in a peremptory way without any statutory authorisation.
Further, that it did not facilitate the efficient administration of claims but rather reduced the number of claims by creating administrative hurdles to stop claims from being submitted.
Brown said the RAF is seeking clarity from the SCA on the RAF1 Form but is also putting contingencies in place to quantify the implications of the use of this form.
He provided different figures for the number of these claims, ranging from 40 000 to 59 000, and highlighted that the RAF processed about 110 000 claims valued at a total of R40 billion.
The value of the claims impacted by the new claims form would be “nowhere near” R230 billion, he said.
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A ‘serious liability’ nonetheless
However, Brown said the RAF interim board is cognisant of the fact that “this is a serious and waiting liability” for the fund.
“We are very alive to it and are already busy with contingency plans on how we are going to deal with the avalanche of those claims coming into the system, how quickly we process them.”
It is “certainly something that is on our radar”.
Department of Transport (DoT) spokesperson Collen Msibi referred Moneyweb to an April 2025 DoT statement in which Deputy Minister of Transport Mkhuleko Hlengwa welcomed an SCA judgment declining to hear a RAF appeal regarding the accounting standards to be used in the fund’s audit process, and that the department expected the RAF to comply with the AG and ensure the fund’s alignment with the appropriate accounting framework.
Msibi added that the transport minister in July 2025 established an Expert Advisory Committee, consisting of a panel of independent experts to review the RAF’s business processes and propose actionable recommendations, to support the development of a sustainable RAF operational and governance model.
Brown said the improvement in the payment of claims by the RAF had reduced the backlog of claims, which is reflected in the decline in outstanding claims to between 140 and 180 days but they wanted to reduce this further to around 120 days.
The RAF reported earlier this month it has paid out R17.6 billion to claimants in the past six months.
Brown said the board wants the RAF to sustain a claims payment level of close to R5 billion every month and will “find ways to cash flow manage that”.
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He said the RAF in the past wanted to invest the money it received to earn interest on it instead of paying claimants, which is a very inefficient cash management system.
Brown said the RAF receives an average of R4 billion to R4.5 billion each month, which is supposed to go to claimants because the fund is not an investment bank.
He said the RAF is addressing the claims payment backlog and even wants to pay more than what it receives each month.
“We are in conversation with Treasury to provide us with the latitude to go beyond what we have [received]. Those conversations are now ongoing,” he said.
Brown said the RAF has also been paying outstanding claims from suppliers but admitted this has not moved at the pace the board would like and it is looking at “capacity to jack that up”.
He urged suppliers with outstanding claims to visit the RAF’s office or write to the fund about outstanding claims, adding that “the turnaround time is quick”.
Brown said Scopa’s inquiry into the RAF is “very important” because the evidence themes are helping the fund’s board to develop a clear roadmap for the RAF and how to fix issues.
Scopa confirmed on Friday it had unanimously decided to subpoena former RAF CEO Collins Letsoalo to appear before the inquiry after repeated unsuccessful attempts to secure his voluntary appearance before the committee.
This article was republished from Moneyweb. Read the original here.
