The disbandment of the Road Accident Fund (RAF) board weeks before suspended CEO Collins Letsoalo’s term of office ends puts transport minister Barbara Creecy in a legal dilemma over the appointment of a new CEO.
Letsoalo’s term ends next month and without a board the process of appointing a CEO will be delayed. The RAF Act stipulates that the RAF board recommends CEO candidates after which the minister appoints one.
Legally, nothing prohibits Letsoalo from applying for a second term.
The minister last week dissolved the RAF board, citing “persistent governance and operational challenges that have beset the RAF and significantly undermined its ability to discharge its statutory mandate”.
The governance and operational troubles at the fund also triggered parliament’s standing committee on public accounts to conduct an inquiry.
The RAF receives almost R50bn yearly from Sars, funded through the fuel levy, and oversight functions are critical. .
Transport ministry spokesperson Collen Msibi said the department planned to appoint a new board by December. The new board would thereafter initiate a process to appoint the head of the fund.
“We have initiated the process to appoint the new board and once the new board is in place it will initiate the process to appoint the new CEO,” said Msibi.
“From what our public entity oversight branch has indicated the board should be in place on or before December 2025.”
Before the board was dissolved, transport deputy minister Mkhuleko Hlengwa had been urging it to fast track the appointment of a CEO.
One of the reasons that led to Creecy disbanding the board was what the Special Investigating Unit (SIU) in its preliminary findings flagged as a “concern that the fund spent R4.7bn on default judgments”. The fund did not renew a panel of attorneys’ contracts in 2020, without backup-up plan, and left the fund unrepresented in court.
Despite governance fallout at the fund, Msibi was adamant the department’s plan to appoint an accounting authority was adequate to allay oversight concerns.
The National Treasury is yet to approve the department’s request to appoint an accounting authority in accordance with the Public Finance Management Act (PFMA).
“The removal of the board will not affect the operations of the RAF based on the appointment of the functionary, who will then become an accounting authority for the entity,” Msibi said.
“He or she will have the same powers as if there is a board or accounting authority. The functionary will be performing the function of the board.”
The PFMA grants an accounting authority legal powers to provide oversight and specifies it “must ensure the public entity has and maintains effective, efficient and transparent systems of financial and risk management and internal control”.
The act requires the authority to ensure an appropriate procurement and provisioning system that is fair, equitable, transparent, competitive and cost-effective.
The PFMA also empowers the authority to ensure disciplinary steps are taken against employees of the public entity who break the law.
The authority, however, has limited legal powers compared with the legal powers of the board and CEO outlined in the RAF Act.
Msibi said RAF chief strategy officer Phathutshedzo Lukhwareni, acting as CEO, would continue acting in the position to provide oversight on operations.
“RAF has an acting CEO who is currently responsible for managing the business. So there is currently no vacuum that will affect the business operations of the entity.”
The department also plans to establish an expert advisory committee. Msibi said the committee would function for about six months.
When asked about the budget for the committee, he said: “The advisory committee will conduct its work for six months and will be paid according to the rate determined by the National Treasury — it is R472 per hour. However, it is also not anticipated that it will be on a daily basis. This will depend on their approved plan.”
At a rate of R472 per hour, one member of a committee could earn about R83,072 a month if they worked normal business hours for a whole month.
However, as the fund undergoes leadership changes, Letsoalo has not stopped challenging his suspension. He has launched an appeal against the Pretoria high court judgment that found his suspension lawful.
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