In a report tabled before Parliament, auditor-general, Shauket Fakie, advised government to take urgent steps to address the Road Accident Fund's faults. Despite an increase in the fuel levy, the fund remains on the brink of collapse.

In a report tabled before Parliament, auditor-general, Shauket Fakie, advised government to take urgent steps to address the Road Accident Fund's faults. Despite an increase in the fuel levy, the fund remains on the brink of collapse.

In his report to Parliament, Fakie stated that the fund was more than R18 billion in debt, and urged that the problem be addressed urgently via effective management solutions.

He reported that the recent rise in the fuel levy had not sufficiently impacted the fund's fortunes.

"Notwithstanding (February's) 5c increase in the fuel levy, it is imperative that the future funding be addressed to ensure that sufficient funds are available to settle outstanding claims and cover operational commitments for the fund to operate," Fakie said.

The fund compensates accident victims with money from the fuel levy and its financial situation has been a growing concern as the fund battled fraud and corruption.

Last year it imposed a six-month moratorium on the payment of claims to improve its cash flow and parliament is currently debating draft legislation to limit the fund's compensation to accident victims. A commission of enquiry has also been launched to investigate the fund's mismanagement.

The Road Accident Fund made an operating loss of three billion rand for the year ended March 2004. It had an outstanding debt of R719m to the South African Revenue Service for outstanding diesel rebates.

Highlighted in the audit of the fund's financial statement was the R50m advance payment to a service provider without a contract, of which only two million rand has since been recovered.

Fakie cautioned that should the fund be required to start paying the outstanding amounts and other amounts accumulated subsequent to March 31 2004, the fund might be able to conduct its ordinary course of business, due to a lack of funds.

Also highlighted by Fakie was the R2,2 million spent on salaries paid to staff who had been suspended pending the outcomes of disciplinary hearings. Also, levies from one oil company amounting to R2,5 million had been outstanding since November 2002.

Other concerns raised by Fakie related to irregularities in claims management, internal control weaknesses, failure to comply with legislation and vacancies in key executive posts.