I promised you a thread, but came up with a new topic thanks to the suggestion of @Unathi_Kwaza.

What you need to know about the Road Accident Fund — another example of how the ANC has mismanaged a vital social service to the detriment of the South African people.

Firstly, let me provide some legal context re what the RAF does.

Usually, when you suffer injury (to person or property) because of the wrongful actions of another person, you sue them for damages (compensation) in the common law of delict.

So, if someone (negligently or intentionally) hit a cricket ball through my window, which hit me on the head before breaking a number of other things in my house, I’d have various delictual claims for both my bodily injury and the loss/damage to my property.

The RAF legislation (and its predecessors) abolished the common law delictual claims for damages resulting from bodily injury or death suffered in motor vehicle accidents.

If a driver runs me over and I become disabled as a result, I cannot sue him for damages in delict.

The common law damages claim is replaced by a claim for compensation against the RAF. Anyone sustaining injury in a motor vehicle accident within SA will have such a claim.

The rationale for this is that it protects victims by ensuring they are able to recover compensation. If the driver who injures me has no money, he wouldn’t be able to pay damages. I would also have to pay a lot of money to go to court.

It also protects drivers from the potentially financially disastrous event of having to defend a damages claim in court, and paying out potentially hefty damages to a person they have injured.

The RAF thus operates as a cover-all state insurance fund. It’s ‘premiums’ are collected through a tax that is added to every litre of fuel. At the moment, this is about R2 per litre — about 15% of the fuel price. In 2018/19, the RAF’s income from fuel levies was R43,2 billion.

The RAF nonetheless pays out far more in claims than it is able to collect in levies. In 2018/19, its net deficit was R55.78 billion.

Currently, its debts exceed its assets by R262.1 billion — 4c worth of assets for every R1 of liabilities.

Is insolvency an inevitability for a state-run insurer? No. Organisations similar to the RAF elsewhere in the world are always solvent. Sound financial management allows an entity like this to operate quite comfortably. Remember, there is a constant source of income from levies.

So, what went wrong? The RAF has been struggling with cash flow since at least 2012. In this case, in my opinion, it is more mismanagement than outright corruption that has led to the RAF’s failure.

The RAF spends tens of billions every year on legal fees. Claimants often say their claims are rejected or delayed, forcing them to take the RAF to court, only for the RAF to make an offer on the steps outside. They then don’t pay out, forcing claimants to go to court again.

Mostly, the RAF just doesn’t do its job well. It doesn’t process enough claims. It doesn’t have efficient systems. It somehow isn’t able (like a normal, private insurer) to separate fraudulent claims from bona fide ones on the submitted evidence.

The Instead of just evaluating claims properly and making fair offers, the fund therefore has to be dragged to court — often by desperate claimants using dodgy, ‘ambulance-chasing’ lawyers — at a huge cost to the taxpayer.

Of course, there’s fraud and corruption within the RAF, too. And, in true ANC style (cf Scorpions debacle), the mechanisms for investigating fraud and corruption within the RAF have been shut down.

In 2015, the RAF Board took the decision to close its Fraud Investigating Task Team (FITT). At the time, the FITT was investigating over 300 cases of corruption, amounting to R300 million.

From 2003 to 2015, the FITT had worked with the NPA and SAPS to prosecute over R1,6 billion worth of RAF-related crime. Employees of the FITT phoned the DA’s offices in shock as people arrived one day to remove their office furniture.

Days after the FITT was shut down, a number of RAF fraud cases disappeared from court roles all over the country. In one KZN town, RAF fraud cases of R12 million against three individuals were withdrawn overnight. This is just one example.

Some employees were suspended after investigations, and a few convictions were made due to Hawks investigations. But the heat seemed to just cool down a bit, and no serious effort was made to seriously turn the RAF around.

Despite hundreds of billions in debt, in 2017, the RAF board approved a 30% bonus for its executives, and approved bonuses for all RAF staff far above inflation. In 2018, board and executive remuneration was R28,9 million with a further R6,5 million in bonuses.

In June 2019, the RAF was in such bad shape that it just stopped using attorneys in court matters. Civil trial rolls were in chaos as the RAF sent legally-untrained officials to appear in court, despite their having no rights of appearance. RAF Executives still got bonuses.

To end this off, I want to refer you to a statement released by the RAF last month. It would be truly hilarious if it wasn’t so tragic: https://www.raf.co.za/Media-Center/RAF%20Media%20Statements/Response%20To%20Its%20A%20Car%20Crash%20Judge%20Slams%20Road%20Accident%20Fund%20As%20Courts%20In%20Chaos.pdf

The media release was a rebuttal to a news article that quoted a Gauteng High Court judge, who ordered the RAF to retain its panel of attorneys in order to protect the rights of claimants. The RAF had attempted to fire them all to cut down on legal fees.

The media release is full of exclamation marks and inappropriate adjectives. It’s a little like an old News 24 comments section rant. It’s sarcastic, and unprofessional, using strange phrases like “uncle lawyer” and “the little girl who remains vulnerable”.

Some of the panel attorneys are corrupt, for sure. Sometimes they just overlook fraud in order to ensure they recover their fees. There are a number of other problems with their practice. Here is an explaner: https://www.moneyweb.co.za/news/south-africa/road-accident-funds-faux-outrage-beggars-belief/

A new RAF CEO, Collins Letsoalo, was appointed last week. Fikile Mbalula is confident he’ll be able to turn the RAF around. That leads me to the takeaways:

(1) The RAF is plagued with structural issues. If it was a commercial business, it would have been liquidated a long time ago. It is broken on so many levels that it cannot be fixed.

(2) The public would probably be better off just relying on the ordinary common law of delict or subsidised private insurance. An agency that is supposed to secure a public good has actively done more harm by removing people’s ability to recover MVA injury damages in other ways.

(3) The problems described above are the hallmark of ANC governance. Similar things happen in almost every state-owned enterprise and institution.

Still, they want to introduce the NHI — just the RAF for healthcare. That will be a disaster, too. It cannot be allowed to happen.