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IOL News
17-07-2025
- Politics
- IOL News
South Africa's Board Dissolution Epidemic: A Symptom of Deeper Governance Malaise
Board dissolutions are symptoms, not solutions. Without fundamental reforms to how we select, oversee, and hold accountable both board members and their political principals, South Africa's governance crisis will only deepen. South Africa's public institutions are haemorrhaging credibility as ministers wield the dissolution axe with alarming frequency. From Transport Minister Barbara Creecy's dissolution of the Road Accident Fund board amid "governance and operational issues" to Higher Education Minister Blade Nzimande's dramatic dismantling of the NSFAS board over chronic payment failures, the pattern is unmistakable: our state-owned entities are failing spectacularly. The sheer volume of board dissolutions reads like a governance disaster checklist. Basketball SA faced dissolution calls after nearly bungling the U18 African Championships, with R5-million in liabilities against just R36 000 in the bank. Sports Minister Gayton McKenzie dissolved the boxing board, creating what observers called "a vacuum" in the sport. The list extends to SA Tourism, multiple Gauteng provincial boards, and the perpetually troubled PRASA. This is not accountability; it is crisis management masquerading as decisive action. When dissolution becomes the default response to institutional failure, it signals a fundamental breakdown in governance oversight. Nzimande's dissolution of the NSFAS board epitomises the deeper malaise. The minister cited the board's inability to implement basic recommendations, failure to submit correct annual reports, and, most damningly, consistent inability to pay student allowances on time. The South African Union of Students called the dissolution "long overdue," describing NSFAS leadership as "some of the most inept and useless people to ever live". Yet where was ministerial oversight when these failures were festering? When opposition parties called for Nzimande's resignation, he defiantly declared: "I will not resign, I am not appointed by them". This encapsulates the accountability deficit plaguing our system. These dissolutions reveal a troubling power dynamic where ministers dissolve boards but rarely face consequences for their oversight failures. With South Africa's Government of National Unity under strain and voter turnout declining from 89% in 1999 to 58% in 2024, public faith in governance institutions is eroding. The question isn't whether these boards deserved dissolution- many did. The question is why they were allowed to fail so catastrophically under ministerial watch. When the Road Accident Fund board was dissolved, why wasn't the transport minister held accountable for allowing "governance and operational issues" to fester? When NSFAS chronically failed to pay student allowances, leaving thousands stranded, why did Minister Nzimande escape censure while his board faced the axe? The pattern suggests that board members serve as convenient scapegoats for broader systemic failures. Ministers appoint boards based on political aspirations rather than competence, provide minimal oversight, and then dissolve them when public pressure mounts. This creates a perverse incentive structure where political principals escape accountability while appointed boards bear the consequences of institutional collapse. The dissolution epidemic reflects not decisive leadership but a fundamental abdication of ministerial responsibility. Consider the audacity: ministers who failed to prevent these institutional meltdowns position themselves as the solution through dissolution, while the very cadre deployment system that created these failures remains untouched and ready to produce the next wave of incompetent appointees. Furthermore, these dissolutions disrupt institutional memory and continuity. When boards are repeatedly dissolved and reconstituted, organisations lose valuable experience and knowledge. The perpetual cycle of destruction and rebuilding wastes resources and undermines long-term strategic planning. Citizens suffer as essential services deteriorate while institutions lurch from crisis to crisis. The cost of this governance failure is measured not just in financial terms but in the erosion of public trust and institutional effectiveness. Each dissolution announcement becomes a damning indictment of the minister's failure to govern, yet mysteriously transforms into evidence of their decisive action, a grotesque inversion of accountability that would be laughable if the consequences were not so devastating for ordinary South Africans. South Africa needs board appointments based on competence, not political will. We need ministers who provide proactive oversight rather than reactive dissolutions. Most critically, we need consequences for political principals who preside over institutional collapse. Until we address the systemic governance failures that necessitate these dissolutions, we will continue this expensive cycle of institutional destruction and rebuilding, while citizens suffer the consequences of perpetual state failure. Board dissolutions are symptoms, not solutions. Without fundamental reforms to how we select, oversee, and hold accountable both board members and their political principals, South Africa's governance crisis will only deepen.
Daily Maverick
16-07-2025
- 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
Mail & Guardian
16-07-2025
- Politics
- Mail & Guardian
Special leave or velvet-glove suspension? A trend in the public sector
Police Minister Senzo Mchunu has been placed on 'special leave'. What does this mean in law? In recent weeks, South Africa has witnessed two high-profile figures, the minister of police and the chief executive of the Road Accident Fund (RAF), being placed on what is termed 'special leave'. Although cabinet ministers are not employees for the purposes of the Labour Relations Act, this raises the question of whether this concept of 'special leave' is just suspension dressed in a velvet glove or whether it carries a different meaning in law and in practice. This article does not analyse the legality of, nor provide commentary on the 'special leave' imposed on the police minister and the RAF chief executive. Instead, it attempts to locate the concept of 'special leave' within the realm of labour law in South Africa. Special leave v Suspension Suspension refers to a temporary removal of an employee from their duties. Suspension in South Africa is typically divided into two categories: precautionary suspension and punitive suspension. A precautionary suspension is usually imposed when an employer is conducting an internal investigation that may lead to disciplinary proceedings. The aim is to safeguard the interests of the organisation by ensuring that the employee does not interfere with the investigation or operations. A punitive suspension, by contrast, is a disciplinary measure taken against an employee found guilty of misconduct. It is less severe than dismissal but entails suspension without pay or benefits — the suspended employee does not receive a salary or benefits while away from work. 'Special leave', on the other hand, is not expressly provided for or defined in South African labour legislation. But it can be said that it is a form of leave granted by an employer to an employee, usually at the behest of the employee, and it can either be based on a policy or an employment contract. Like precautionary suspension and unlike punitive suspension, special leave is generally paid and the employee receives full benefits. But, without a clear definition in legislation or case law, the concept of special leave can be misconstrued and, in some instances, used as means to (indirectly) suspend employees. This was the case in Sibanyoni v Speaker of the City of Mbombela and Others . Here, the applicant, the chief financial officer of the City of Mbombela, approached the labour court on an urgent basis seeking to have the council's resolution to place her on 'special leave' declared unlawful and set aside. This followed a report accusing her of alleged misconduct and recommending that it be investigated. The court found that the special leave as contemplated in the regulations can only be granted at the behest of an employee and there is no such concept as 'forced special leave'. In reaching its decision, the court referred to other precedents, including Heyneke v Umhlatuze Municipality , where the court in dealing with the placement of a municipal manager on 'special leave' found: 'Special leave that is imposed on employees is effectively a suspension in the hope of subverting the residual unfair labour practice provisions of the Labour Relations Act No 66 of 1995 (LRA) and all the time and other constraints that accompany suspensions.' Likewise, in South African Municipal Workers Union obo Matola v Mbombela Local Municipality , it was held that what the respondent labelled as 'special leave' resolution was nothing but the suspension of the applicant in that case. In the end, the court in Sibanyoni found that the special leave imposed by an employer is essentially a euphemism for a precautionary suspension, to create an impression that the provisions were complied with. Whether the special leave is imposed for a prolonged period or short period is irrelevant, because it remains a suspension regardless. As a result, the court declared the resolution adopted by the council to place the chief financial officer on special leave unlawful, set it aside and ordered her reinstatement. While special leave and suspension are theoretically distinct principles, the growing use of special leave to suspend employees blurs the lines between the two. Accordingly, when an employer considers placing an employee on 'special leave', it must do so in a manner consistent with the employment contract or the workplace policy regulating such leave. Failure to do so may result in a finding that the special leave was, in fact, a suspension, and that the employer used the term to mask procedural unfairness and evade legal obligations. If the employer intends to suspend the employee, it should follow the legal prescripts governing suspensions to avoid exposure to unfair labour practice claims. Andile Mphale is a dispute resolution attorney at Lebea Inc Attorneys.
The South African
16-07-2025
- Business
- The South African
RAF board dissolved amid scandal and leadership failures
South Africa's Road Accident Fund (RAF) is undergoing a dramatic overhaul after Transport Minister Barbara Creecy officially dissolved the fund's entire board following months of internal collapse, financial mismanagement, and leadership failures. In a statement, the Department of Transport confirmed that the decision followed escalating governance failures, ranging from reckless decision-making to boardroom infighting, and the inability to fill critical executive positions – all of which have severely undermined the RAF's ability to function effectively. Wasteful legal battles : The RAF spent millions on protracted court disputes, particularly around accounting standards. : The RAF spent millions on protracted court disputes, particularly around accounting standards. Leadership instability : The board's handling of suspended CEO Collins Letsoalo drew legal challenges and worsened internal divisions. : The board's handling of suspended CEO drew legal challenges and worsened internal divisions. Ballooning debt : Default judgments and unpaid claims have deepened the RAF's financial crisis. : Default judgments and unpaid claims have deepened the RAF's financial crisis. Power struggles : Crucial decisions were passed by narrow votes rather than board consensus. : Crucial decisions were passed by narrow votes rather than board consensus. Unfilled vacancies: Strategic roles like Chief Claims Officer and Head of Legal remained empty for months. 'This has resulted in a loss of confidence in the board's ability to run the entity effectively,' said Minister Creecy. To avoid a leadership vacuum, the Department of Transport has asked the National Treasury to appoint an interim Accounting Authority. A new board will be established through a transparent recruitment process, while an expert panel will conduct a full review of the RAF's operations. The Special Investigating Unit (SIU) may also expand its existing corruption investigation to include recent controversies under the outgoing board. Creecy reiterated her commitment to pushing forward the Road Accident Benefit Scheme Bill, aimed at simplifying the claims process under a no-fault system, which could revolutionize how victims receive compensation. As trust in the RAF hits rock bottom, many see this as a much-needed reset. However, analysts warn that the real test will be whether new leadership can deliver accountability, efficiency, and transparency to an institution crucial to the lives of road crash victims. Let us know by leaving a comment below, or send a WhatsApp to 060 011 021 1 Subscribe to The South African website's newsletters and follow us on WhatsApp, Facebook, X and Bluesky for the latest news.
The Herald
16-07-2025
- Business
- The Herald
Transport minister dissolves RAF board
Transport minister Barbara Creecy has dissolved the board of directors of the Road Accident Fund (RAF) after ongoing governance and operational challenges that have severely hampered the agency's ability to fulfil its statutory mandate. According to the department, on June 5, Creecy issued letters to the 11 members of the board, allowing them to make representations regarding her intention to dissolve the board due to their failure to discharge their fiduciary duties effectively. National department of transport spokesperson Collen Msibi said the representations were received and considered. 'Consequently, the board has been dissolved. A submission has been prepared requesting the minister of finance to appoint an interim functionary as accounting authority in accordance with the Public Finance Management Act. The proposed appointment is intended to prevent a governance vacuum while a new board is being constituted,' Msibi said. Msibi said the governance challenges in the agency and concerns that were confirmed through internal oversight and regulatory engagements include the protracted and costly litigation pursued by the RAF on the application of accounting standards, which has resulted in further strain on the entity's financial resources and capacity. 'The inconsistent and, at times, reckless handling of the suspension of the CEO that attracted a legal challenge and institutional uncertainty. The frequent incurrence of default judgments against the RAF, worsening its contingent liabilities and weakening its financial sustainability. Deep divisions within the board itself, evidenced by most resolutions being passed through the use of casting votes, rather than consensus, reflecting a lack of cohesion in critical decision-making processes,' Msibi said. He said this also included the failure by the board to fill at least two critical executive positions a chief claims officer and the head of legal. According to Msibi, this had resulted in the loss of confidence in the board's ability to run the entity effectively. Msibi said a draft public advertisement has been prepared to commence the process of appointing a new board, ensuring transparent and merit-based selection in line with applicable legislation. 'To support the development of a sustainable operational and governance model, the minister has initiated the appointment of a panel of independent experts to review the RAF's business processes and propose actionable recommendations. Members of the panel will be announced in due course. 'Furthermore, a request has been made to the SIU to establish if the current investigation under Proclamation 44 of 2024 covers the events of the past three months and, if not, formally request the expansion of the scope to cover these events. The response from the SIU in this regard is eagerly awaited,' he said. Creecy has emphasised her department's intent to finalise the road accident benefit scheme bill, which will introduce a no-fault system to make it easier for road accident victims to access the benefits without costly legal bills. TimesLIVE
