SIU recovers R317m in duplicate payments to lawyers from Road Accident Fund
Special Investigating Unit has referred 12 law firms to the NPA for prosecution, and reported five practising lawyers to the Legal Practice Council
The SIU has recovered more than R317m erroneously paid to lawyers by the Road Accident Fund (RAF), and is also investigating claims that the RAF lost millions more rand to maladministration and corruption.
The SIU began its probe in 2021. On Wednesday, it briefed parliament’s Standing Committee on Public Accounts (Scopa) on what it described as a “lengthy and complex investigation” into problems at the cash-strapped RAF.
The unit’s probe centres on fraudulent claims and payments, procurement and tender irregularities, alleged maladministration and possibly unlawful conduct of employees.
The investigation has so far cost R3.3m, while the SIU has managed to recover R317.6m from the return of duplicate payments made by the RAF to legal firms.
Leonard Lekgetho, the SIU’s chief national investigations officer, told Scopa that 102 law firms, including sheriffs, were being investigated regarding R340m in duplicate payments from the RAF.
“The RAF has a payment system which dictates that when a claims offer is accepted, whether by settlement or by way of a court order, such claim will wait 180 days before it is paid,” Lekgetho said.
“As a result, an attorney will attach the RAF bank account by way of writs of execution served by the sheriff, causing the RAF bank to effect payment in terms of the writs upon the 180 days lapsing. The same claim will be paid again [because it was claimed on the RAF’s internal system], thus constituting a duplicate payment,” he added.
Several legal practitioners had signed acknowledgment of debt amounting to R70m and others had refunded duplicate payments directly to the SIU.
“Disciplinary referrals will be made against those implicated officials who failed to ensure that proper controls are in place to mitigate duplicate payments, or officials who failed to implement the controls. Those officials who left the employment of RAF will be referred to the NPA (National Prosecuting Authority) where there is evidence of criminality in their conduct,” Lekgetho said.
The SIU also had evidence pointing to “trust fund accounts being misappropriated”, he said, adding that 12 law firms had been referred to the NPA for prosecution, and five practising lawyers had been reported to the Legal Practice Council.
The SIU raised concern about the RAF’s decision to scrap its panel of lawyers, an issue that was also sharply criticised earlier this year in an open letter penned by the country’s leading legal bodies.
MPs heard that the SIU was investigating why the RAF had cancelled the panel of attorneys that represented the agency in court in claim disputes, and that the SIU was investigating whether this move had led to a recent spike in default judgments against the RAF.
“The total amount of default judgments issued against the RAF for cost and fees from 2018 until second quarter of 2023 amounts to R4.7bn. A sharp increase in the default judgments is noted between 2021 and 2022,” Lekgetho said.
“There was a matter where a claimant was awarded a default court order amounting to R11.1m which the RAF failed to honour on time, which led to this amount accumulating interest worth about R500,000 which was paid out in respect of the claimant,” he added.
“The investigation is at an advanced stage and the team is finalising the findings and giving the right of reply to the person involved before they finalise their referrals.”
The contracts awarded to service providers that the SIU is looking into include the procurement of office furniture and cleaning and security services.
Those procurement irregularities were previously flagged by the office of the Auditor-General.
Lekgetho said the SIU had found the RAF contravened Section 217(1) of the constitution and section 51(1)(a)(iii) of the Public Finance Management Act in contracts awarded to two service providers to deal with the backlog in RAF claims by victims of road accidents.
“This matter will be referred to the SIU civil litigation for assessments and potentially to be taken to the tribunal,” he said.
Another questionable contract, valued at R1.8m, related to the procurement of SAP Licences. (SAP is a company that provides software systems.)
“The preliminary findings indicate that the RAF is not using the said SAP licences, thus this amounts to fruitless and wasteful expenditure ... There is a potential recovery because the RAF is not using the licences and currently we’re still putting evidence together so we can refer it to our civil litigation for consideration,” Lekgetho said.
“The investigation is ongoing and where there is a matter pointing to criminality, same will be referred to the NPA. There are possible referrals of disciplinary action to be made to RAF.”
The SIU is yet to make findings on office furniture expenditure, where it is alleged that an internal audit report indicated that a R36m contract escalated to R40m irregularly.
The unit’s interim finding is that due procurement processes weren’t followed in the rental contract of RAF’s head office building in Centurion.
“It appears that the RAF went at length to ensure that this building was procured. The investigation is ongoing. There is a potential recovery and the potential amount will be determined after the quantification process,” Lekgetho said.
RAF’s rental of its Johannesburg office is also being probed.
“There were many deviations and the preliminary findings points that this contract may have been awarded irregularly,” Lekgetho said.
The SIU is also investigating whether service providers such as hospitals, ambulances, doctors, experts and lawyers systemically overcharged the RAF and whether this was done in collusion with RAF employees.
Lekgetho said the SIU is also investigating RAF employees who redirected R1.9m of payments intended for service providers into personal bank accounts.
Meanwhile, payment of about R482m owed to attorneys has been blocked while the RAF investigates whether that amount is indeed owed.
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