Illustrative image | Suspended RAF CEO Collins Letsoalo. (Photo: Thapelo Maphakela / Gallo Images) | South African banknotes. (Photo: Adobe Stock) 
Suspended Road Accident Fund (RAF) executives Collins Letsoalo and Sefotle Modiba allege they were targeted for exposing deep-seated corruption within the fund.
At a press briefing on Saturday, CEO Letsoalo and Modiba, the acting chief investment officer, said there were widespread systemic issues within the RAF, including fraudulent claims, questionable legal practices and a misrepresentation of the fund’s financial liabilities.
They contended that their suspensions were a direct result of their attempts to implement reforms that challenged established interests, alleging a pattern of judicial bias, questionable actions by other entities, and a desire to revert the RAF to a less transparent, more vulnerable state.
They said their actions saved the fund significant money, and their suspensions were politically motivated attempts to undermine their reforms.
This comes after Parliament’s Standing Committee on Public Accounts (Scopa) in June announced that it would launch a full committee inquiry into the RAF following concerns about financial mismanagement, irregular expenditure, procurement irregularities, cash flow and investment disclosures, and non-compliance with financial regulations.
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Convoluted system
In addition to the RAF’s R340-billion in liabilities, the Auditor-General has repeatedly pointed out irregular expenditures, procurement failures and inadequate internal controls.
All of this while victims of road accidents face significant delays in claim payouts, leaving thousands trapped in a convoluted system that has been made worse by poor management.
Letsoalo, who was appointed as acting CEO in April 2020 under the then minister of transport, Fikile Mbalula, and whose appointment was made permanent in August 2021, was suspended by the RAF board on 3 June for insubordination related to his refusal to appear before a Scopa meeting.
He launched a court bid to be reinstated, but the Gauteng Division of the High Court dismissed it on 26 June, finding that Letsoalo had failed to show he had any legal right to an urgent interdict.
Modiba was placed on precautionary suspension on 17 June due to the circumstances surrounding the termination of his previous employment with the City of Johannesburg, among other things.
In a letter to Modiba’s lawyer, Scopa’s chairperson, MP Songezo Zibi, said the committee was concerned that the RAF had neither vetted Modiba nor inquired into the City of Johannesburg terminating his employment.
Scopa had received a letter from Johannesburg’s executive mayor stating that Modiba had not faced a disciplinary hearing because he had resigned. This, according to Zibi, directly contradicted Modiba’s assertion that charges of gross negligence, gross dishonesty and gross dereliction of duty against him were withdrawn.
On Saturday, before the briefing, Zibi posted: “This week, there have been attempts to get the decision of Scopa to hold a Committee Inquiry into the RAF rescinded. They have failed. There will be accounting for public funds under oath, in public. We will upload every document the public is entitled to see on the Parliament website.”
Read more: RAF CEO Collins Letsoalo hits back at media criticism, allegations of malfeasance
At the press briefing on Saturday, Modiba said his and Letsoalo’s suspensions were primarily because of their efforts to reform and clean up the RAF.
“I identified that there was cherry picking and prioritisation of claim payments by certain employees within the RAF, driven by bribery. I found out there was a corporatised, intentional approach to prioritising certain legal firms’ claims over others. This thing was termed ‘fixed allocation’.
“So you had a few legal firms, predominantly white, who would then get the biggest slice of the fuel levy as it was paid into the fund’s account, while the marginalised would have certain claims of theirs which were not paid. Some of these claims were sitting at over 1,000, 2,000, 3,000 days of age, versus these other prioritised ones whose age was sometimes even lower than 30 days,” said Modiba
Letsoalo’s version
“Ours has been a journey of victimhood where we are just victimised all the time. One does not know why we are victimised,” said Letsoalo at the briefing.
He said there were major problems at the RAF before he and Modiba arrived, and it had turned into “a looting vehicle that people could do lawfully”.
He said he was placed on special leave on 27 May, the day before he was scheduled to appear at Scopa. He was then suspended for not attending Scopa on the day he was on special leave, which he called “absolute nonsense”.
Letsoalo detailed how his court case challenging the suspension was moved and reassigned to different judges multiple times under “strange circumstances”. He said he had received threats because of his actions at the RAF.
Now the RAF is facing a substantial financial challenge with a reported liability of R322-billion.
However, Letsoalo said: “There’s no such thing [as a R322-billion liability]. The reality is that we are dealing with previously advantaged individuals who had cornered the RAF, and they continue to do that. And they buy people. They tried to buy me, I refused.”
Ahead of the media briefing, the suspended executives said they would show how a R322-billion “phantom liability” was created to loot at least R250-billion from the national coffers and the alleged involvement of the judiciary in creating a crisis at the RAF.
Letsoalo said that the International Monetary Fund and the Financial Services Board had reclassified the RAF as a social security fund or social benefit fund, meaning that its business model was “not based on insurance principles”.
He contended that the Auditor-General of South Africa and the Accounting Standards Board were incorrectly pushing the RAF to account like an insurer, which caused the liability to “balloon”.
He said that upon implementing a new strategy in FY2020, the RAF under Modiba’s leadership had reduced the short-term liability from R19-billion in November 2019 to R8.27-billion by March 2024.
He claimed they reduced the overall liability by R304-billion from R320-billion in 2020 and that the “actual liability was sitting at less than R20 billion”.
Modiba’s version
Modiba was adamant that the charges against him by the City of Johannesburg were “fully withdrawn” before he joined the RAF, and the RAF had conducted a screening for criminal records and qualifications when he was hired.
He said he had provided correspondence to the RAF proving no charges were pending, but it nevertheless proceeded with his suspension. He added that the State Security Agency’s vetting of him was almost complete when he was suspended.
He questioned whether his suspension had a “racial connotation,” noting that his replacement was a “young gentleman, very professional”, who is white. Modiba claimed this person was not vetted and lacked the experience to run an investment management team.
Modiba's press briefing presentation
Modiba said his suspension posed risks to the RAF’s stability and progress.
Alleged underlying reasons
Both executives argued that their suspensions were a direct consequence of their successful efforts to combat corruption and improve the financial stability of the RAF, which they claimed upset powerful individuals and entities who had benefited from the fund’s mismanagement.
They claimed that state institutions, particularly the Special Investigating Unit (SIU) and Scopa, had been “repurposed and weaponised” against them. DM