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The Citizen
2 days ago
- Business
- The Citizen
Two law firms get lion's share of RAF's R103m legal services spend
A disproportionately high 84%. Scopa wants to know why. Scopa chair Songezo Zibi was unimpressed that Scopa had to ask three times before the RAF supplied information about the top 10 law firms it uses. Picture: Michel Bega/ The Citizen The Road Accident Fund (RAF) paid 84% of the total R103.1 million it spent on corporate legal services in its 2024 financial year to Malatji & Co Attorneys Inc and Maponya Ledwaba Attorneys – just two of the 43 legal firms on its panel. Malatji & Co was paid R55.87 million by the RAF in 2024 and Maponya Ledwaba R30.75 million. The RAF revealed this in a presentation to Parliament's Standing Committee on Public Accounts (Scopa) last week. These two law firms were also paid the bulk of the amount the fund spent on legal services in the RAF's 2023 financial year, with Malatji & Co paid R15.25 million and Mopanya Ledwaba R14.86 million of the RAF's total corporate legal services bill of R34.26 million that year. Zibi said Malatji & Co in particular received 'an incredibly disproportionate portion of the work allocated by the RAF'. Source: RAF presentation to Scopa, 28 May 2025 This information was initially not made available to Scopa and was only provided after committee chair Songezo Zibi complained that it had twice requested information about the top 10 law firms that received briefs from the RAF and accused the fund of deliberately withholding this information from the committee for improper reasons. ALSO READ: RAF CEO placed on special leave with full pay, as MPs grill fund Law firm selection Acting RAF CEO Phathutshedzo Lukhwareni said a panel of 43 law firms was appointed by the RAF in December 2023 but only 19 were briefed and paid during the 2023 and 2024 financial years 'at the time of preparing the report [presentation]'. Lukhwareni said the RAF has a panel of law firms and the selection takes place depending on the complexity of the matter. Scopa member David Skosana of the ANC asked what criteria is used to allocate briefs among the 43 law firms, why only 19 firms had been briefed and paid, and what measures are in place to ensure cost effectiveness and equitable distribution of work among the firms on the panel. Scopa member Mark Burke of the DA said Maponya Ledwaba Attorneys was extracting R30 million a year from the RAF but 'has got one director, three senior associates and an associate as a secretary and an admin clerk'. 'Does that seem right? Does it seem reasonable that a firm with that staff cohort could be extracting that value and delivering value?' asked Burke. Lukhwareni said some of those disbursements were for counsel fees and the cost is determined by the complexity of the matters they have handled and, if the matter is prolonged for a number of years and goes all the way to the Supreme Court of Appeal (SCA) for instance, the cost will obviously be significant. He said repeat briefings are determined by the successes the law firm have registered in the previous cases but declined to comment on the size of Maponya Ledwaba Attorneys because he is not privy to this information. 'To the extent that they [the two law firms] are in the panel and are competent to be in the panel, I don't see any unreasonability in that,' he said. ALSO READ: RAF needs a Settlement Hub for crash victims – expert The 'complex' cases Mampe Kumalo, who was referred to by Lukhwareni as the RAF's head of legal but is the fund's chief governance officer, said the complex cases these firms had or were handling include the Discovery Health, South African Revenue Service (Sars) and Auditor-General matters. The Discovery Health matters relate to various applications it launched against the RAF linked to the failure of the fund to pay the past medical expenses of claimants. The Sars matter involved an application to stop and prevent the tax collection authority from deducting R5.1 billion – or any part of this amount from the RAF levies it collects – to pay Eskom in terms of a settlement agreement between Sars and the power utility. ALSO READ: R25.5 billion deficit over five years — Can RAF afford to pay out claims? Repeat business despite repeated failure Zibi requested Kumalo to provide Scopa with a detailed breakdown by the close of business on Thursday of the fees paid to the two firms, including attorney fees, party-party costs, the cost of counsel and punitive costs orders against the RAF. 'The reason I want this is that you have persistently been clobbered on the AG matter by a law firm you continue to pay and see absolutely no reason to seek another law firm,' he said. Deputy Minister of Transport Mkhuleko Hlengwa said they must not be ignorant to the fundamental risk which prevails at the RAF because of the lawyers. 'The abuse of the system and the leakages of the money not reaching claimants in part is a result of the construct of the RAF. 'Why are we spending so much money on legal fees?,' he asked. 'We should be spending it on claimants because the whole system is fundamentally structured in a way which is problematic, hence the bill that we will be bringing … to parliament.' ALSO READ: RAF national crisis demands urgent action – expert Malatji responds Approached for comment about how the firm was able to receive such high fees from the RAF and if it has had any engagements with the Special Investigating Unit (SIU), Tebogo Malatji – MD of Malatji & Co Attorneys – told Moneyweb the firm has no way of knowing how the RAF decides to appoint attorneys on matters and what criteria it uses to do so. 'We are thus unable to tender the explanation you seek and suggest that you direct the question to the RAF. As the two directors primarily responsible for the servicing [of] the RAF, I have 31 years practice experience and Ms Sunelle Eloff, 24 years,' he said. 'We have personal injury law experience from the time that we started practice, have acted for the RAF for the most part of our practice lifespan and are therefore experts in the field. 'We are also one of the leading public law specialist firms in the country. 'We can only but speculate that the reasons the RAF instructed us in each instance that they did must have something to do with our years of experience, expertise and suitability for the matter at hand,' said Malatji. 'We have acted for the RAF in several of their most complex matters assisted by senior and junior counsel from the Bar and that accounts for the high value of payments to our firm displayed. 'Moreover, the figures displayed at Scopa as being payments to our firm consist primarily of counsel/advocates and other disbursements and to a lesser extent fees to our firm,' he added 'Until we are confronted with the actual number of instructions issued by RAF to its panel attorneys, we do not accept your assumption that it is our firm that allegedly received a disproportionate number of instructions.' Malatji added that the SIU has not engaged the firm on this issue. Maponya Ledwaba Attorneys has not responded to a Moneyweb request for comment on these same issues. This article was republished from Moneyweb. Read the original here.
Eyewitness News
23-05-2025
- Business
- Eyewitness News
SCOPA chair Zibi says time to get budget process back on track
CAPE TOWN - Chairperson of Parliament's Standing Committee on Public Accounts (SCOPA) Songezo Zibi says it's time to get the budget process back on track after a value-added tax (VAT) debacle that has derailed two previous attempts to table a budget for the country. In his latest iteration of the budget, Finance Minister Enoch Godongwana has opted to lift a three-year freeze on increasing the fuel levy instead of raising the standard tax rate. Zibi said the budget debate has become about taxation rather than the realities of spending cuts to key departments such as health and education to fund the R2.5 trillion budget. "The debate around the budget is supposed to be about the order of those priorities - and whether these allocations are sufficient, or to be spent in an efficient manner. We never got the chance to have that discussion. I hope that now there will be an opportunity to do so."
The Citizen
22-05-2025
- Business
- The Citizen
‘We pay too much': Public funds wasted on inflated government costs, says Zibi
The Scopa chair called for stricter financial discipline, and proposed benchmarks to curb excessive spending. Rise Mzansi leader Songezo Zibi has criticised the government for wasting public funds by overpaying for goods and services, and failing to hold officials accountable for wasteful spending. His comments came during a media briefing by parliament's finance cluster on Thursday, a day after South Africa's third national budget was tabled. The latest fiscal plan outlined R68 billion in spending cuts over the next three years. The reductions aim to address revenue losses caused by the government's decision not to increase the value-added tax (VAT) rate. 'Pro-poor' budget During Thursday's briefing, Joe Maswanganyi, chairperson of the Standing Committee on Finance, described the 2025/2026 budget as 'pro-poor'. 'The budget, we believe, will bring inclusive growth even under constrained conditions,' he said. 'The budget contains hard choices, but it protects the vulnerable and positions our economy for stability and reforms.' ALSO READ: Pressure on Sars to prevent tax increases in 2026 Maswanganyi also praised the R7.5 billion allocated to the South African Revenue Service (Sars), aimed at boosting revenue collection. 'This reinforces fairness in our tax system, ensuring that all citizens and companies, especially the wealthy, pay what they owe.' However, he raised a red flag over the country's debt costs, pointing out that South Africa spends R1.2 billion per day on servicing debt. 'That needs to be addressed.' Watch the briefing below: Budget should prioritise solving real problems Zibi, the chairperson of the Standing Committee on Public Accounts (Scopa), spoke of the positive elements in the budget process, especially the growing engagement of South Africans. 'Taxpayers finally said, 'No more money. We make do with what we already give you'. 'This is a very good thing because people can now appreciate that the government, and that means taxpayers themselves, do not have limitless resources. READ MORE: Sensible or underwhelming? Economists react to Godongwana's Budget 3.0 'Money does not fall from trees. So you cannot commit to do everything, pay for everything, and not have problems thereafter.' He argued that the controversy over VAT had detracted from the real purpose of a national budget, which is setting expenditure priorities. 'Budgets are meant to solve problems. The debate around budgets is supposed to be about the order of those priorities and whether these allocations are sufficient or to be spent in an efficient manner.' Government wasting money Zibi highlighted flaws in how the government allocates and manages expenditure, pointing out that over R820 billion is spent on salaries, R440 billion on social grants, and R424 billion on debt servicing. The Rise Mzansi leader criticised government inefficiency and overspending, particularly in the procurement of goods and services. 'We pay too much because some of them are poorly conceived, poorly planned, poorly managed and often there is corruption.' READ MORE: Budget 3.0: not austerity budget, but a redistributive budget He called for expenditure reviews to ensure that 'every rent goes as far as possible' and also questioned whether the government remains fit for purpose. 'Do we have the right number of civil servants doing the kind of work that needs to be done? Or are we trying to fit a square into a circle?' Zibi called for stricter financial discipline and proposed the introduction of benchmarks to curb excessive spending. 'We need to set benchmarks where the government does not spend more than 100% of planned project spend, and staff are incentivised for projects that are completed on time and within budget. 'We cannot have civil and construction projects lasting double or triple the time, at double or triple the cost that was initially planned. That is not value for money.' Budget expenditure review Zibi further recommended 'centralising' project management to improve oversight and reduce inefficiencies. 'Consulting engineers, we've learned, are a massive weakness, failing to ensure that the work is of the right quality, payments are only made when the work is done, and when those payments are made, they're in line with what we should be paying. 'Fighting corruption is a priority to the minister reaffirmed yesterday.' Zibi added that both National Treasury and the Government Technical Advisory Centre (GTAC) have done work in recent years to better understand public expenditure patterns. He revealed that he has invited Finance Minister Enoch Godongwana for further engagements on the matter. 'We will look at exploring a joint sitting between the finance committees where he will lay out for two days, the areas where the government since 2013-2014 has been spending money, where that expenditure has been efficient, whether that expenditure has not been efficient, and what some of the critical interventions that can be made are.' NOW READ: Godongwana cuts zero-rated food basket in Budget 3.0
IOL News
22-05-2025
- Business
- IOL News
Scopa chair calls for urgent action to address fiscal leakage in South Africa
Scopa chairperson Songezo Zibi says the work of releasing funds that are stuck in inefficiencies, incompetence, and poor planning should begin so that those funds can go towards investing in things that will fix the economy. Image: Timothy Bernard / Independent Newspapers The Standing Committee on Public Accounts chairperson, Songezo Zibi, said on Thursday there was a need to fix a whole lot of problems to get to a point where fiscal leakage was stopped and public finances began flowing to the right things. 'We have to do the work of releasing funds that are stuck in inefficiencies, incompetence, and poor planning so that those funds can go towards investing in things that will fix the economy,' Zibi said. He made the statement during the post-Budget briefing by chairpersons of finance cluster committees when they were asked about pressure they could make on the relevant portfolio committee and those involved regarding the review of fuel price structure. This is after the Finance Minister Enoch Godongwana proposed the increase of fuel levy, which is believed will hit the poor and inevitably lead to an increase in transport costs. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ In his response, Zibi noted that there were serious reductions made in the Budget that ranged from education, health, and infrastructure, among others, compared to allocations made in the March Budget. 'The question about VAT, fundamentally, was about how much money we should allocate for those problems. Do you want to give the government more or less money? The view was that the government should get less money – that is the impact. The question, really, is not about the fuel levy, but how much less you want to give the government and which of the things we must continue to cut,' Zibi said. He also said there must be short-term pain as part of resourcing the things the government must do. 'There must also be work on spending reviews,' said Zibi before noting that there was no accountability for those who waste public funds and that the government continued to overpay for goods and services. Mmusi Maimane, chairperson of the Standing Committee on Appropriations, said the process of reviewing the fuel price must be paramount. He also said his take on the Budget was that Godongwana was operating within a very constrained wiggle room, and the one cushion that could be relied on was that inflation was relatively low. 'I think we need to really review how we look at the fuel price, and therefore I will certainly raise the question with the Minister of Finance tomorrow,' Maimane said. He emphasised the importance of strengthening the currency and benefiting from the weakening dollar. 'We have to ensure the trade balance is stronger, and therefore, I can't stress enough the importance of attracting foreign direct investment. Part of that is to have a stronger currency to ensure, actually, your currency is not weak, so that purchasing power on oil is lower and will help with fuel price,' Maimane said. Joe Maswanganyi, Finance Committee chairperson, said citizens and the corporate sector have the responsibility to pay tax to fund public services. Maswanganyi said there should be no promotion of a situation where the public and corporate do not want to pay taxes. 'There is no state that can function without revenue; otherwise, if you run a state on populace, at some stage, that state will collapse. Taxation enables the government to fund essential public goods,' he said. However, Maswanganyi said they understood the implication of the fuel levy increase, but stated that it has been mitigated. 'The minister spoke about putting more money into transport, and in this regard, on the commuter rail system. It is highly subsided and is quite cheaper compared to other modes of transport in South Africa. The more you have commuter trains back on the railway lines, the more the poor, working class, and workers will use that mode of transport.'
IOL News
22-05-2025
- Business
- IOL News
Political parties 'don't want a repeat' of Budget drama
Scopa chairperson Songezo Zibi said parties in the GNU will ultimately support the budget. Image: Supplied The chairpersons of standing committee on public accounts and appropriations are confident that the 2025/26 Budget will be passed by Parliament by the end of next month. This after Finance Minister Enoch Godongwana tabled a revised budget on Wednesday after he withdrew the Revenue and Appropriations Bills last month in order to propose expenditure adjustments amid a court case by the DA and the EFF, as well as negotiations between the ANC and some of the smaller parties. Speaking during a media briefing by chairpersons of finance cluster committees, Scopa chairperson Songezo Zibi said part of the consultation by Godongwana with Government of National Unity leaders was to give a detailed presentation on what was in the Budget. 'Unless something changes this morning, subject to the amendment that Parliament has to make as part of the appropriation process, the parties in the GNU will ultimately support the Budget. So it will pass. We will not have this scenario where the Budget does not pass,' Zibi said. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ He warned that were they to get to a point of being irresponsible, civil servants won't be paid their salaries. 'I don't think we should get there,' said Zibi, who is also the leader of Rise Mzansi. Standing committee on appropriations chairperson Mmusi Maimane says there is political will to make sure the budget passes. Image: Itumeleng English / Independent Newspapers His sentiments were echoed by standing committee on appropriations chairperson Mmusi Maimane. 'It will pass, I can give that assurance. There is political will to make sure it passes. I don't think there is a single party that wants to see the drama of the last number of months,' he said. Maimane, who is also the leader of Build One South Africa, said the question was not that the budget will be rejected, but whether Parliament can amend it. 'We should see a picture of how we amend the budget consistent with the Money Bills and Related Matters Act. The way to do that is to obsess, not about the current financial year but about the inner and outer years,' he said. Maimane said he was impressing on members of the appropriation committee to think about the adjustment they could propose in the event Godongwana makes announcements during the upcoming Medium Term Budget Policy statement later this year. Parliament has until the end of July to pass the budget. Failure to do so will result in the temporary expenditure by government based on previous year's allocation being reduced from the permissible 40% to 10%. Addressing journalists before the Budget was tabled on Wednesday, Godongwana emphasised the importance of passing the Budget, saying the 10% to be spent was less than the public service wage bill. 'If we don't finish the budget by the end of August, we are going to experience what the Americans experience, which is closing government,' Godongwana said. Parliament's standing committee on finance chairperson Joe Maswanganyi says Parliament has the power to amend the budget, like any other legislation. Image: FIle Asked what the standing committee on finance would do differently to ensure the fiscal framework report did not lead to a legal challenge, committee chairperson Joe Maswanganyi defended their decision to adopt the report, a move that had prompted the EFF and the DA to approach the Western Cape High Court. Maswanganyi said MPs had raised views with a mandate from their political parties. 'That meeting voted for a fiscal framework report. The majority voted. If other members are not happy, it is up to them. They have to win elections next time, that is the rule of the game,' he said. 'The National Assembly adopted the fiscal framework report on that day. That's how we run Parliament,' he said. Asked whether they shared the same sentiments with Godongwana, that the process to amend the budget was cumbersome, Maswanganyi would only say that they can amend it. 'It is the legislation of Parliament. Like any legislation, it can be amended,' he said. But, Maimane noted that it was difficult to amend the budget due to the tight timeframes set out in the Money Bill and Related Matters Act. He outlined some of the procedures to be followed within a short time before the passing of the budget was finalised. Maimane also said the timelines for the Money Bill and Related Maters Act needed to be adjusted to give power to Parliament to amend the Budget and also add capacity to the Parliamentary Budget Office to do research.
