Latest news with #Letsoalo
The Citizen
6 days ago
- Business
- The Citizen
Outa welcomes dissolving of RAF board and cancelling of license card tender
The RAF board was suspended after many calls to fix the RAF, while it seemed that the licence card tender was awarded irregularly, Outa says. Civil action organisation Outa has welcomed more heads rolling in the Department of Transport as the RAF board is dissolved and the dodgy licence card contract heads to court as the department tries to cancel it. Outa said in a statement that it welcomes this decisive action from Minister Barbara Creecy and urges full accountability. Dissolving the Road Accident Fund (RAF) board is the latest in a string of accountability moves in the department. These steps follow the suspension of RAF CEO Collins Letsoalo in June, along with a series of high-level suspensions and interventions at other entities in the transport portfolio. 'Too much has gone unchecked for too long. Minister Creecy's decision to dissolve the RAF board sends a strong message that poor governance and executive overreach will no longer be tolerated,' Wayne Duvenage, CEO of Outa, says. ALSO READ: Creecy dissolves RAF board amid governance and operational failures Outa noted deep governance failures at RAF He points out that Creecy cited deep governance failures at the RAF, including: Wasteful litigation over accounting standards The mishandled suspension of Letsoalo A flood of default judgments increasing the RAF's liabilities Persistent divisions within the board The longstanding failure to fill critical posts, including chief claims officer and head of legal. 'In our view the board failed to challenge irregular conduct and allowed serious issues to fester, including the suspension of other senior staff without due process, which appeared aimed at silencing internal dissent.' Duvenage says Outa calls on the minister to appoint a new board with the governance depth and political will to reform the RAF, restore its mandate and investigate misconduct under the previous leadership. ALSO READ: RAF CEO placed on special leave with full pay, as MPs grill fund Outa welcomes key changes at Department of Transport He points out that this follows these other key changes in the transport sector: The Road Traffic Management Corporation (RTMC) CEO advocate Makhosini Msibi was placed on precautionary suspension by the RTMC board from 1 July. The Airports Company South Africa (ACSA) group executive for enterprise, security and compliance, lieutenant general Mzwandile Petros, was also suspended. The RAF's chief investment officer, Sefotle Modiba, was suspended with Letsoalo. And now, Duvenage says, after months of delay, the Department of Transport finally filed papers in the Pretoria High Court aimed at overturning the controversial R898 million contract awarded to Idemia South Africa to supply a new driving licence card printing machine. In early September last year, Outa exposed serious procurement irregularities in this contract and submitted a detailed report to Creecy, who passed it on to the Auditor-General of South Africa (AGSA) and asked for further investigation. ALSO READ: Why has the questionable driving licence card tender not been overturned? Outa's exposed serious procurement irregularities The AGSA's report, which forms part of the department's court papers, confirms that Creecy requested an investigation on 5 September after 'widespread public concern' over the appointment of Idemia. The request was accompanied by Outa's detailed report outlining allegations of procurement irregularities. 'The minister's communication was accompanied by a letter from Outa that contained specific allegations of an irregular procurement process were made. At the time of receiving the minister's request, auditors at the AGSA were already in the process of reviewing the specified tender as an early regularity audit process,' Duvenage says. The AGSA then expanded its investigation scope. 'The AGSA took our concerns seriously, and we commend Creecy for acting on them. This is how civil society, oversight institutions and public representatives should work together to tackle maladministration.' ALSO READ: Transparency concerns arise over new driving licence card machine tender Outa got the ball rolling to stop Idemia contract The court papers outline multiple flaws in the contract, including: A nearly R400 million cost escalation, from the original cabinet-approved budget of R486 385 million to the signed contract of R898 597 million. Use of outdated pricing. Omission of printing material costs. Evaluation errors in scoring and machine assessments. Bidder non-compliance and weak documentation. The case is brought by the Department of Transport, with the founding affidavit filed by the department's acting director-general, Mathabatha Mokonyama, against Idemia South Africa. (The director-general, advocate James Mlawu, resigned last year with effect from 28 February 2025). The department is asking the court to set aside the Idemia contract, re-run the tender and allow the Department of Home Affairs to print the licence cards in the interim. ALSO READ: DoT urged to pause driving licence card machine procurement Outa says DLCA linked capacity for such a complex render The procurement process was managed by the Driving Licence Card Account (DLCA), an entity in the Department of Transport which the department admits lacked the capacity to handle such a complex procurement. Duvenage points out that while the tender documents refer to 'Idemia Identity and Security – South Africa,' Outa noted that no such entity exists in the Companies and Intellectual Property Commission (CIPC) registry. The contract was ultimately signed with Idemia South Africa, a company that changed its name from Morpho Cards SA in 2021. The department included the AGSA's report, its own internal procurement assessment and an external review as supporting evidence in the case. A notice in the court file confirms that the department is opposing mediation, citing unresolved disputes with Idemia. It is not yet clear whether Idemia will oppose the legal challenge, Duvenage says.
Daily Maverick
7 days ago
- Business
- Daily Maverick
The Road Accident Fund is due for a robust clean-up
The recent suspension of Road Accident Fund (RAF) CEO, Collins Letsoalo, followed by Minister Barbara Creecy's decision to dissolve the RAF board this week, is a welcome move and a long overdue signal that serious intervention is finally under way at this embattled institution. While the RAF's rot certainly worsened under Letsoalo's leadership since 2019, its dysfunction long predates his tenure. The decline began as far back as 2008/09, not coincidentally, the same period when State Capture began to take root under former President Jacob Zuma. The RAF has since become a textbook case of how cadre deployment, poor governance and weak financial oversight give rise to the collapse of a state institution, which in turn leads to widespread failure to deliver on its mandate to the people and massive increases in costs to society. Consider this: in 2005/06, the RAF received just more than R5.5-billion in fuel levy income (then 37 cents a litre), ran a manageable claims book and even produced a surplus of R1.4-billion – thanks in part to a once-off Treasury grant of R2.5-billion. It was, at the time, still largely functional and able to fulfil its mandate, and a 5c increase in the RAF levy would have negated the Treasury bailout. However, within three years, by 2008/09, the RAF's operating expenses had ballooned more than 350% to R24-billion. To cover this growing shortfall, the fuel levy was pushed up to 47c per litre, which was a 27% increase in just three years that significantly outpaced inflation. The rot had taken hold, and opportunistic law firms and other specialist advisory services began feasting on the RAF's inability to manage claims effectively, many settling on courthouse steps at enormous cost to the fund. From 2009 onwards, this chaos spiralled. By 2020, operating expenses had doubled again to nearly R49-billion. However, this figure masked a growing backlog of unpaid claims, with the RAF simply stalling many settlements. Its actuarial liabilities had exploded to an estimated R322-billion, as referenced in its 2020 annual report. Fuel levy hikes In a deeply troubling move, Letsoalo and the RAF Board attempted in 2021 to manipulate the fund's finances by rewriting its accounting policies to reduce liabilities by R306-billion, effectively hiding the problem rather than fixing it. Thankfully, the Auditor-General rejected this cunning plan, and the matter was taken to court. During these loss-of-control years, the public paid a heavy price. Between 2009 and 2022, the RAF levy on the fuel price shot up 360%, from 47c to R2.18 per litre. These hikes inflated the cost of transport, food, and consumer goods for every South African. Instead of fixing the RAF's broken systems, the government simply passed the costs on to the public through excessive, above-inflation levy increases. Had the RAF levy increased only at the rate of inflation, it would have reached just 94c by 2022 – not R2.18. In real terms, the RAF received around R200-billion more than it would have under inflation-linked increases, which is essentially a hidden tax caused by incompetence, maladministration and poor political will. Minister Creecy's intervention must now be the start of a serious turnaround. The next step is critical: appointing a capable, independent and professional board with the skill and courage to fix this institution. That board must recruit qualified executives and people with experience in managing risk, claims, and fraud prevention. South Africa has many capable, retired insurance industry professionals with a deep understanding of complex claims environments and the controls needed to stop internal and external abuse. These are the people the RAF desperately needs. I would also urge the minister to send a strong and unambiguous message to the ANC's cadre deployment machinery – hands off the RAF. It's time to rebuild this institution based on merit, integrity and competence. Not politics. The pain inflicted on accident victims, the public purse, and our economy by a broken RAF is incalculable. Fixing it will take courage and resolve, but it must be done. The window for action is now open. Minister Creecy must not waste it. DM
Eyewitness News
15-07-2025
- Business
- Eyewitness News
Suspended RAF CEO Letsoalo says he helped save R50 million
JOHANNESBURG - Suspended Road Accident Fund CEO, Collins Letsoalo, said that he helped the fund save R50 million during his tenure, achieving all key objectives set for him since taking office in 2020. Letsoalo was speaking at a media briefing in Pretoria on Saturday, alongside suspended chief investment officer, Sefotle Modiba. ALSO READ: • 'Do you want us to die in silence?' Suspended RAF execs claim they're receiving death threats • Modiba and Letsoalo say their suspension from the RAF is 'baseless' • RAF rescinds decision to place CEO Letsoalo on special leave, replaces it with suspension • SIU probing RAF CEO Collins Letsoalo over R79m lease • Suspended RAF CEO Letsoalo will still receive his full pay & benefits
IOL News
14-07-2025
- Politics
- IOL News
Collins Letsoalo, the suspended RAF CEO claims corruption within the legal fraternity
Collins Letsoalo, suspended RAF CEO during a media briefing claimed there is corruption within the legal fraternity Image: File SUSPENDED Road Accident Fund CEO Collins Letsoalo, during a media briefing held on Saturday, together with chief investment officer Sefotle Modiba, attributed many of the problems at the fund to 'corruption' within the legal fraternity, which he claimed included the judiciary. Letsoalo and Modiba, who has also been suspended, said they were being targeted for trying to expose corruption within the fund. The aim of the briefing was to provide 'context' into the reasons behind their suspensions. While Letsoalo was soon due to once again face Judge Nasious Moshoanathe to ask for leave to appeal against the judgment in which the judge refused Letsoalo's urgent application to immediately be reinstated, Letsoalo was clear that he thought the judge was biased from the start. He said his and Modiba's journey at the RAF was one of victimhood. 'We have been victimised all the time. One does not know why. It would seem people want to believe when we arrived at the RAF everything was fine, but that is not true.' Letsoalo said before he took over in 2020, the RAF was repurposed into a looting vehicle where people could 'loot legally." He referred to one law firm, which he said at the time made R1.2 billion a year from the fund. 'We are dealing with corruption, which permeates itself across the legal fraternity. Our judiciary comes from the legal fraternity. So the question you must ask yourself is when is this Damascus moment when this plaintiff attorney or panel attorney suddenly becomes a judge and suddenly becomes honest?' Letsoalo said while he has evidence against the 'corrupt' legal fraternity, nobody wants to hear him. He was told to present his evidence to the Judicial Service Commission, but believes that the JSC will, in any event, do nothing about it. Speaking about first being placed on special leave and later on suspension, Letsoalo said the reason given was that he did not attend a Scopa meeting on May 28. But, he explained, he was placed on special leave the previous day and told not to attend the Scopa meeting. 'Then they tell me I'm placed on special leave because I did not attend Scopa. It's absolute nonsense, but certain judges believe they were right,' he said in referring to Judge Moshoanathe's findings against him during his recent urgent application to have his suspension lifted. Letsoalo also referred to the fact that his urgent application was moved by the judge president from being heard on the urgent roll to a week later when it was placed on the special motion roll. He said the judge who was due to hear the matter was changed twice - and that the matter was eventually given to Judge Moshoanathe - who issued a scathing judgment against him. He also questioned how, under these circumstances, he was still slapped with a costs order. But, Letsoalo said, he was a man of integrity and he was ready for the battle to prove that the judiciary had been captured. 'I will show you the capture of the judiciary - they close ranks and they change the rules,' he said.
Daily Maverick
14-07-2025
- Business
- Daily Maverick
‘A journey of victimhood' — suspended executives say they were targeted for exposing corruption at RAF
Collins Letsoalo and Sefotle Modiba said their actions saved the fund significant money, and their suspensions were politically motivated attempts to undermine their reforms. 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. 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.' 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
