Road Accident Fund Crisis Deepens: R400bn Liability Increase Amid Record Payouts and Corruption Scandals

RAF Achieves Record Monthly Payouts Despite Mounting Crisis

The Road Accident Fund (RAF) has reached a significant milestone by disbursing a record R5.5 billion in claims during October 2025, marking its highest monthly payout for the 2025/26 financial year. This achievement comes as the newly appointed board reflects on its initial 100 days in office while grappling with unprecedented challenges that threaten the fund’s sustainability.

From April through October 2025, the RAF has provided R20.2 billion in compensation to road accident victims, surpassing the R16 billion allocated over equivalent periods in the previous two financial years. The monthly breakdown shows a consistent upward trajectory:

• April: R1.6 billion
• May: R2.4 billion
• June: R1.8 billion
• July: R2.1 billion
• August: R2.6 billion
• September: R4.2 billion
• October: R5.5 billion (record high)

Massive Liability Increase Threatens Fund’s Future

Despite the positive payout news, the RAF faces a potential financial catastrophe. The fund has confirmed that its liabilities could increase by between R300 billion and R400 billion due to its decision to revert to its previous South African accounting standard.

RAF interim chair Kenneth Brown revealed that the fund’s liabilities because of the accounting standard change is “anybody’s guess but somewhere between R300 billion and R400 billion.” This staggering figure adds to an already precarious financial position, with the fund currently dealing with approximately R40 billion in additional liabilities, including a significant portion related to default high court judgments.

The Accounting Standards Controversy

The RAF adopted a different accounting standard in April 2021, which resulted in its liabilities plunging from R327 billion in 2019/20 to just R34 billion in 2020/21. This dramatic reduction led the Auditor-General to issue a disclaimer of the financial results, sparking a legal battle that the RAF ultimately lost.

The fund’s decision to revert to the original accounting standard has exposed the true extent of its financial obligations, revealing what critics describe as “hidden liabilities” that were artificially reduced through questionable accounting practices.

Corruption Scandals Rock RAF Leadership

Parliament’s inquiry into financial mismanagement at the RAF has uncovered shocking details about the extravagant lifestyle of former CEO Collins Letsoalo. The investigation revealed that Letsoalo maintained:

• Nine bodyguards at a cost of over R23 million over two and a half years
• A R4.4 million armoured vehicle
• Protection officers who spent R1.7 million on fuel in 2024 alone

RAF’s head of security, Stephens Msiza, testified that he believed the jump from six to nine protectors was “absolutely nonsense,” but Letsoalo insisted his life and that of his family were under threat following a security breach at an RAF office in 2022.

Systemic Governance Failures

The current board, which commenced duties on August 8, 2025, inherited an organization plagued by:

• Profound governance, financial, and human resource issues
• Inadequate financial oversight and negative audit outcomes
• Regulatory non-compliance and governance breakdowns
• Default court judgments amounting to R13 billion accumulated over four years
• Pervasive fraud and corruption under investigation by the Special Investigating Unit

The RAF1 Form Controversy and Hidden Claims

A significant controversy surrounds the RAF1 Form, introduced through a board notice in 2022, which requires road accident victims to provide extensive documentation far beyond what the RAF Act mandates. This has resulted in:

• Approximately 80,000 legitimate claims being rejected
• An estimated R230 billion in “hidden” liabilities
• Hundreds of thousands of South Africans being denied justice

The High Court in Pretoria declared the RAF board notice “unconstitutional, unlawful and invalid” in November 2023, ruling that it created administrative hurdles to prevent claims submission rather than facilitating efficient administration.

Turnaround Efforts and Future Outlook

Despite the challenges, the new RAF board has implemented several initiatives during its first 100 days:

Governance Reforms

• Reformed governance committees
• Commissioned independent reviews of past governance lapses
• Implemented suggestions from the Special Investigating Unit and Auditor-General
• Developed action plans for audit deficiencies

Operational Improvements

• Reduced outstanding claims processing time to 140-180 days
• Target to further reduce processing time to around 120 days
• Sustained monthly payout levels approaching R5 billion
• Enhanced stakeholder engagement and transparency

Impact on Road Accident Victims

The RAF crisis has far-reaching implications for South African road accident victims who depend on the fund for compensation. With the fund receiving an average of R4 billion to R4.5 billion monthly but needing to pay out R5 billion or more, the sustainability of current payout levels remains questionable.

The Association for the Protection of Road Accident Victims (Aprav) has called for immediate action, including:

• Withdrawal of the unlawful RAF1 Form Board Notice
• Return to the 2008 RAF Act and original claims procedures
• Re-registration of all unlawfully rejected claims
• Allocation of “link numbers” to ensure payment

Government Response and Expert Advisory

The Department of Transport has established an Expert Advisory Committee consisting of independent experts to review the RAF’s business processes and propose actionable recommendations. This committee aims to support the development of a sustainable RAF operational and governance model.

Transport Minister Barbara Creecy’s office has indicated that the department expects the RAF to comply with the Auditor-General’s requirements and ensure alignment with appropriate accounting frameworks.

Looking Ahead: Challenges and Opportunities

The RAF faces several critical challenges in the coming months:

Financial Sustainability

With potential liabilities of up to R400 billion and monthly income of only R4-4.5 billion, the fund requires significant financial restructuring or government intervention to remain viable.

Legal Accountability

Parliament’s Standing Committee of Public Accounts (Scopa) has unanimously decided to subpoena former CEO Collins Letsoalo to appear before the inquiry, signaling a commitment to accountability for past mismanagement.

Operational Excellence

The board’s focus on digital transformation, operational enhancements, and improved client interactions could help streamline claim processing and reduce administrative costs.

Conclusion

The Road Accident Fund stands at a critical juncture. While record payouts demonstrate the new board’s commitment to serving road accident victims, the massive liability increase and ongoing corruption investigations highlight the depth of the crisis inherited from previous management.

Success will depend on the board’s ability to implement comprehensive reforms, secure adequate funding, and restore public trust in this vital social security institution. The coming months will be crucial in determining whether the RAF can overcome its troubled past and fulfill its mandate to provide timely compensation to South African road accident victims.

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