A law firm and its clients have launched a bid to declare the cash-strapped Road Accident Fund (RAF), its board and CEO Collins Letsoalo, delinquent at the South Gauteng High Court.
K Molao Incorporated Attorneys launched the application on behalf of its 28 clients last week.
The law firm, which is based in Cape Town, said it brought the application to declare RAF directors delinquent for misleading Parliament, being found to be in contempt of court by multiple court orders, contravening the RAF Act and Public Finance Management Act (PFMA), as well as violating the Constitution and failing to carry out its fiduciary duties.
Asked if RAF, the board, and Letsoalo were aware of the application and whether it would challenge it, marketing and public relations specialist Boniswa Matshoba acknowledged receipt of the query and said they would attend to it.
However, yesterday (Thursday), Letsoalo launched the RAF’s Drive Your Claim Forward campaign to encourage claimants to submit outstanding documents required to finalise their applicants to reduce the 321 000 backlog in claims. He said more than 200 000 of outstanding claims were older than three years.
Transport Minister Sindisiwe Chikunga, Minister of Finance, Enoch Godongwana, Parliament’s portfolio committee on Transport, Standing Committee on Public Accounts (Scopa) and the speaker of Parliament were also cited as respondents but were not required to oppose it. They were cited as having an interest in the matter.
The attorneys also want Letsoalo and the board to be declared delinquent for non-compliance with the vetting process, failing to apply or deviating from normal accounting standards, which, according to the applicants, is unlawful.
They also want the court to declare Letsoalo a delinquent director for wasteful and fruitless expenditure and failure to apply the required emotional intent.
The applicants also applied for the RAF, board chairman Lorraine Francois and Letsoalo to be declared incapable of running the affairs of any state-owned entity or company.
K Molao sole director Kabelo Molao, in his affidavit, said he launched this application after exhausting amicable remedies encouraging Letsoalo and RAF board to dispense from, among other things, wasteful expenditure and after the remarks made by Scopa members.
“I further confirm that, this well researched move was prompted by the cumulative effect of the mess at the third respondent (RAF) perpetuated by the first (board), second (Francois) and fourth (Letsoalo) respondents,” said Molao.
His reference to Scopa’s remarks referred to a committee meeting in February at which Scopa chair, Mkhuleko Hlengwa, said that Scopa had to institute an action to declare RAF board members delinquent directors for a “fishing expedition” of court oversight.
This followed the failure of the new board, which was appointed on October 1, 2023, to reverse the previous RAF board’s decision to institute litigation against the Auditor-General (AG) about the appropriate accounting standard to be used to prepare its 2021/22 financial results and its rejection of directives the RAF was given not to proceed with this litigation.
It was also reported that Letsoalo and board misled Parliament with financial statements that did not reflect the true nature of RAF’s debt position, which in February was estimated to be R3 billion.
Molao said the applicants were the claimants whose claims were legally lodged with RAF, and were finalised through offers of settlements, while some have legally binding court orders in their favour.
Molao added that, as the main stakeholders, the applicants had the “locu standi” to launch this application. They were acting in these proceedings in their own interest to protect their constitutional rights to obtain effective legal redress for awards granted by the court and settlements they obtained directly from RAF arising from valid claims and valid court orders they obtained from the court.
He said the applicants were also seeking to enforce their rights in so far as the RAF Act and the Constitution direct and preserve the guidelines and the systems for which RAF was meant to serve at this stage and for future functionality.
Molao said instead of raising funds as was designated by the RAF Act, the board and Letsoalo went to court to simply thwart the applicants from getting their payments.
“The RAF core business has remained stagnant as Letsoalo is on a crusade which seeks to disenfranchise the very same people whose interests the RAF Act and the Constitution mandate upon him to serve,” said Molao, who added that Letsoalo had a track record of destabilising the RAF.
He said since Letsoalo took over the reigns at RAF, it has been without legal representation and this has led a mess of enormous proportions at the parastatal and in courts. He said Letsoalo terminated the service of the panel of attorneys without a clear litigation strategy and board resolution.
Molao said Letsoalo also appointed senior managers and service providers without vetting them, which was at variance with section 27 of the Constitution, PFMA and Treasury regulations.
He said Letsoalo also perpetuated the refusal to follow directives and policy as he did during his tenure at the Road Traffic Management Corporation (RTMC).
“One good example at RAF is when he was directed to withdraw a case against the Auditor-General by the Minister who is his principal, he refused to do that. This, he even did in Parliament when he appeared before Scopa.
“What Letsoalo has done in refusing to pay the applicants and other claimants is an act of vindictiveness and lack of leadership maturity, which has cost the RAF millions of rand if not billions,” said Molao, adding that the board's failure to act where it was supposed to act made Letsoalo a power unto himself.
He said instead of action against Letsoalo, the board remained supine.
“The refusal by Mr Letsoalo to respect the rule of law and failure by the board to carry its fiduciary duties by failing to play its role of financial oversight should earn them a delinquency status. By failing to pay applicants, the RAF board and Mr Letsoalo have contravened Section 17 of the RAF Act.”
manyane.manyane@inl.co.za