The Road Accident Fund’s deficit was so immense that the only way to save the body would be to increase the fuel levy and/or limit compensation paid to victims.
The Road Accident Fund’s deficit was so immense that the only way to save the body would be to increase the fuel levy and/or limit compensation paid to victims.
That was what the fund’s finance manager, Johann Rabie, told Parliament’s select committee on social services on Tuesday, yesterday.
The fund’s end-of-year deficit of R16,6 billion, which included a substantial reserve provision for outstanding claims, has more than doubled since 1997.
CARtoday.com recently reported that numerous lawyers, doctors and fund officials had been arrested for fraud and corruption.
The final report of the Satchwell commission of inquiry into the operations of the fund is expected next month.
CARtoday.com reported in August that the Road Accident Fund had launched a pilot project, Locking Up The Facts (Luft), designed to prevent fraudulent claims from being paid out.
Luft, which is being implemented country-wide, entails independent inspectors going out to road crash scenes and taking down all relevant facts.
According to RAF financial executive Duncan Anderson, small claims make up between 60 and 70 per cent of money paid out by the fund, making them the focus of the crackdown.
Anderson said early indications are that the fund is saving at least R2 for every R1 spent on the project. According to conservative estimates, between R300 million and R500 million was being defrauded from the fund every year.
But if the corruption crackdown and Luft project is improving the financial recovery of the fund, is it doing enough?
Rabie was quoted as saying that the operating deficit of the fund for the 11 months ending on March 31 was R133 million. “When the R3,3 billion provision and the R13,3 billion deficit at the beginning of the year were included, the fund was in deficit to the tune of R16,6 billion,” the report said.
Rabie said the fund was technically insolvent but could remain afloat if there were increases in the fuel levy, which finances the fund.
“The only way to save the fund is through legislative changes to cap the claims and to not pay out the capital portion of claims upfront but to rather do that in installments,” Rabie said.
Fund board chairman Kessie Naidu said delays in finalising the commission’s inquiry were delaying action to improve the situation, “because any action could end up being in conflict with the body’s final recommendations”.
Corporate counsel for the fund, Judge Chris Greenland, told the committee that the reality was that South Africans “crashed their cars too much”.
South Africa was one of the world’s leaders in road carnage and only Kenya and Egypt had more road accidents. There were more than 520 000 motor accidents in South Africa each year, Judge Greenland said.
