Transport Minister Barbara Creecy has dissolved the Road Accident Fund (RAF) board in a bid to clean up the entity, which has been beleaguered by ongoing governance and operational failures.
Creecy’s spokesperson, Colin Msibi, said in a statement on Monday that the minister had made the decision after initiating an internal oversight process and regulatory engagements regarding the entity’s problems.
“This follows persistent governance and operational challenges that have beset the RAF and significantly undermined its ability to discharge its statutory mandate,” said Msibi.
He said “notable governance challenges and concerns” were confirmed through the internal oversight process, including:
• The protracted and costly litigation pursued by the RAF on the application of accounting standards, which has resulted in further strain on the entity’s financial resources and capacity.
• The inconsistent and, at times, reckless handling of the suspension of CEO Collins Letsoalo that attracted a legal challenge and institutional uncertainty.
• The frequent incurrence of default judgments against the RAF, exacerbating its contingent liabilities and weakening its financial sustainability.
• Deep divisions within the board, evidenced by most resolutions being passed through the use of casting votes, rather than consensus, reflecting a lack of cohesion in decision-making processes.
• The failure by the board to fill at least two critical executive positions, which are critical to its mandate, namely Chief Claims Officer and Head of Legal.
Msibi said Creecy had issued notices to the 11 board members, inviting representations before its dissolution on 5 June, a process that was now complete after due consideration.
“A submission has been prepared requesting the Minister of Finance to appoint an interim functionary as accounting authority in accordance with the Public Finance Management Act,” said Msibi.
He said this would ensure there was no governance vacuum as a new board was recruited via a transparent, merit-based process.
He said Creecy had launched an Expert Advisory Committee to overhaul the RAF’s business model, with panel members to be named soon. A request to the Special Investigating Unit to expand its Proclamation 44 of 2024 probe into the fund, to cover the last three months, had also been filed.
“Minister Creecy has reiterated her department's commitment to continue to pursue all necessary measures to restore institutional stability and enhance the RAF’s capacity to fulfil its statutory obligations …and ensure speedy and equitable access to the Road Accident Benefit Scheme by road accident victims,” Msibi said.
She is also pushing to finalise the Road Accident Benefit Scheme Bill, introducing a no-fault system to cut legal costs for victims.
