Crisis In RAF: Legal head has no law degree Creecy reveals as entity bleeds money in court

Transport Minister Barbara Creecy has disclosed alarming deficiencies within the legal department of the Road Accident Fund (RAF).

Speaking in response to questions from Freedom Front Plus MP Philip van Staden, Creecy highlighted that not only was the RAF's legal unit performing below expectations, but it was being led by someone without formal legal qualifications.

“It is so sub-optimal that the head of the legal unit does not have a law degree, which I would have thought would be a basic requirement,” she said, emphasising the critical need for capacity building within the organisation.

“Outsourcing all of these functions is expensive and not appropriate, so this legal department does have to be rebuilt,” Creecy said when committing to rectifying the situation.

The issue of litigation has been a sore point at the RAF, and it forms part of the inquiry by the Standing Committee on Public Accounts (Scopa) amid its litigation against the Auditor-General over the accounting standard policy.

Suspended RAF Chief Financial Officer Bernice Potgieter revealed at the Scopa inquiry that the entity has incurred legal costs amounting to approximately R11.1 million in its legal battle against the Auditor-General (A-G).

This figure contradicted Creecy's earlier statement that the legal fees totalled over R22 million.

 When pressed by ActionSA MP Alan Beesley to explain the discrepancy, Creecy acknowledged the inconsistency and apologised for the incorrect answer.

She clarified that the cost of the dispute was R11,381,619.66 and was still pending taxation.

Beesley further interrogated Creecy on how long the absurdity of the RAF suing the Auditor-General would persist, and whether she could assure that proper accounting standards would be used in the ongoing financial year.

Creecy responded firmly, stating that she instructed the newly appointed interim board to ensure it puts an end to what she called a “horror show”.

“I am advised that there is a process of unscrambling the egg, but they have advised me that they are doing that.”

She elaborated that to amend accounting standards, the RAF would need to approach the Accounting Standards Board and ask for permission.

“The A-G doesn't have the power, even if you take her to court, to change the accounting standards. That is the role of the Accounting Standards Board,” said the minister.

“I did share that with both the chair of the board and the CEO in the past, and I said to them, withdraw your court case and go through the correct route if you believe that your arguments with regard to accounting standards are correct.

“I said that it's a complex process to unscramble. The end part of that process is understanding the contingent liability and understanding what the organisation will do about it.”

Asked by Transport Portfolio Committee Chairperson Donald Selamulelo about plans to deal with the governance, financial, and procurement challenges at RAF post-Scopa inquiry, Creecy said the interim board chairperson informed her and her deputy, Mkhuleko Hlengwa, that there were interventions the board was implementing.

“The first is an assessment of all existing contracts to cut costs. The second is looking at the entire integrated claims management system to move from a paper-based system to a digitised one, where claimants can be notified of the process,” she said.

“The third is making sure that there is capacity to implement RAF’s technology strategy. Fourthly, assessing the legal environment in which RAF operates, and building internal legal capacity so that the entity does not need to be over-reliant on external legal expertise.”

She added that the RAF was currently seized with advertising the posts of executive for corporate services and the executive claims officer.

“These are two important critical vacancies that must be filled.”

mayibongwe.maqhina@inl.co.za