By Roy Cokyane.
The board of the Road Accident Fund (RAF) has suspended CEO Collins Letsoalo for insubordination related to his refusal to appear before Parliament’s Standing Committee on Public Accounts (Scopa) last week.
This decision was taken by the board during a special meeting on Monday night (2 June) after rescinding its resolution taken last week to place Letsoalo on special leave with full pay and benefits.
This was confirmed by RAF board vice chair Nomonde Mabuya-Moloele during a meeting with Parliament’s Portfolio Committee on Transport on Tuesday.
It has also emerged that the board is expected to face a showdown with Deputy Minister of Transport Mkhuleko Hlengwa at a meeting next week on a number of issues – including its defiance of Hlengwa’s directive to stop all litigation against the Auditor-General (AG).
The RAF is still challenging the AG’s disclaimer of the fund’s 2020/21 annual financial results on the basis that the fund used an accounting standard it is not permitted to use.
Several members of the committee called the RAF board incompetent and for it to be dissolved.
In March 2024, when Hlengwa was Scopa chair, he suggested the committee institute action to declare the RAF board members delinquent directors for the “fishing expedition” of oversight by the courts related to the AG’s RAF audit disclaimer.
Hlengwa said on Tuesday that “all is not well in [the] RAF on a number of fronts” and that is why he has scheduled a comprehensive board meeting for next week to engage with the board on all of the issues at hand.
“I’m exploring the necessary options and legal instruments available as part of the considerations of introducing ministerial intervention into the RAF, through a ministerial advisory process, on the current issues and the previous issues, including but not limited to the governance challenges currently at play,” he said.
Hlengwa pointed out that the RAF now has three negative judgments against it on the issue of the accounting standards.
“I have been very clear with the board that they are to desist from further court action and it remains the solid position of the Ministry that the Accounting Standards Board (ASB) must be engaged to complete its process on the identification of an applicable and appropriate accounting standard because that work is underway.
“I will not be swayed on that because I do not believe that it is for the court to prescribe a standard,” he said.
Hlengwa said the AG has made a finding on the accounting standards and an audit action plan around the accounting standard must be developed in response to that finding.
“We must grapple with the ASB to say they need to complete this in earnest to ensure the RAF gets an applicable standard.”
Board to reconsider planned appeal to ConCourt?
“The board is aware of this decision that they are to desist from further court action and that position has not changed and will not change,” said Hlengwa.
“It is my expectation that they must comply.”
Mabuya-Moloele said the RAF board decided at its special meeting on Monday night that its resolution taken on 24 April 2025 – to appeal to the Constitutional Court following the Supreme Court of Appeal (SCA) order dated 31 March 2025 to dismiss with costs the RAF application for leave to appeal – will be urgently discussed with Hlengwa.
This is because the high court judgment classified the RAF as an insurer, which would have “dire and/or adverse effect on the liabilities of the entity”.
She indicated that the board will, at this meeting, reconsider its resolution to appeal the matter to the Constitutional Court.
RAF policies vs CEO contract
Responding to questions from members of the committee, Mabuya-Moloele confirmed that the RAF board had to regularise its decision to place Letsoalo on special leave because the fund’s policies do not provide for special leave although Letsoalo’s contract does allow for it.
She said the RAF board obtained legal advice, adding: “We don’t see anything wrong in regularising the decision.”
She added: “It’s not from any pressure, be it ministerial or anything. It came straight from the board once we had taken legal advice on the matter.”
Top two law firms’ case outcomes to be assessed
The RAF board also decided that the outcome of all court cases in which Malatji & Co Attorneys and Maponya Ledwaba Attorneys represented the RAF should be presented to the fund’s Risk, Governance, Actuarial and Legal Committee, with the board to determine whether the RAF derives value for money from the legal services offered by these firms.
The board further indicated that RAF’s management will provide explanatory reasons related to “the preferential treatment given to these law firms over others on the corporate legal panel”.
Scopa was told last week that the RAF paid 84% of the total R103.1 million it spent on corporate legal services in its 2024 financial year to these two law firms.
Acting RAF CEO Phathutshedzo Lukhwareni told Scopa a panel of 43 law firms was appointed by the RAF in December 2023 but only 19 were briefed and paid during the 2023 and 2024 financial years.
More moves by the board …
Other decisions taken by the RAF board at its special meeting included:
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Recommending that RAF acting chief investment officer Sefotle Modiba be placed on precautionary suspension with full pay and benefits with immediate effect because of concerns regarding his previous employment at the City of Johannesburg and other matters that are currently under investigation; and
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The prioritisation of the process of filing all vacant executive management positions (chief claims officer, chief investment officer, chief corporate support officer and head of legal services), and directing management to appoint acting officials in the positions of chief claims officer, chief investment officer, head of legal services, and head of people management.
Mabuya-Moloele said the RAF board is equally concerned by the RAF CEO taking two-and-a-half years to appoint a claims officer and basically acting as the claims officer.
“It is an issue that brings in issues around how are we paying claimants on time, [and] why do we not know what we are doing?
“Hence, one of the recommendations is that we need to get an acting claims officer so the CEO is not a player and referee, “she said.
“It is unheard of in a business where claims is the basic bread and butter of the business that we have a CEO who also manages the claims, so it’s an area of concern.”