Critical state-owned fund spends R16 million on a budget of R10 million

An enquiry report into the Road Accident Fund (RAF) has exposed major overspending on legal costs at the state-owned funding scheme.

The findings relate to an investigation by the Special Investigating Unit (SIU) into the RAF, which provides compensation to victims of motor vehicle accidents for injuries or deaths.

The SIU revealed before the Standing Committee on Public Accounts (SCOPA) that the RAF had entered into an agreement with the Government Employees Pension Fund (GEPF) in 2020.

Through this agreement, the RAF would be allowed to participate in the GEPF’s contracts for corporate legal services, with the RAF Board approving this on 29 April 2020.

Under the contract, the RAF could employ the services of the 19 law firms which constitute the GEPF’s Corporate Panel of Attorneys.

Between May and June 2020, the RAF entered into agreements with 13 law firms to provide corporate legal services for a period of 10 months.

Only 12 of these firms appeared on the GEPF’s panel, with the SIU saying that it was unclear how the 13th firm, Malatji & Co Inc., was procured.

The Board of the RAF reportedly approved a budget of R10 million per annum for the fund’s participation in the transversal GEPF contracts.

The RAF failed to comply with this budget, and within the first 7 months of the contract had incurred and paid an amount of R26.6 million, an excess of 166%.

While the contract was initially set for a 10-month period, the RAF extended this agreement four separate times between March 2021 and March 2022.

Of these, only the third extension was approved by the RAF’s Board, a six-month extension lasting from 1 November 2021 until 30 April 2022.

A further concern for the SIU regarded the allocation of work, with almost 90% of the work reportedly being allocated to Malatji & Co.

Following the expiration of the GEPF contract in September 2023, the RAF began a process to establish a new panel of attorneys.

Some of the 13 original law firms elected not to extend their contracts with the RAF, with the Board approving the appointment of seven firms for a 12-month period to handle ongoing legal matters.

The estimated budget for this seven-member panel was R80 million, VAT inclusive, eight times more than the approved budget of the 2020 panel.

A chaotic approach to litigation

By December 2023, the RAF had completed procurement processes for a new Corporate Panel of Attorneys, in line with a competitive bidding process.

The budget allocation for this panel was R485 million over a five-year period, with the panel consisting of 43 law firms, including all 13 of the firms that made up the 2020 panel.

The SIU found that between 2023 and 2024, R180 million was paid out to just 19 of these 43 firms, with Malatji & Co. receiving 51.48% of this (R92.73 million).

The Corporate Panel was also frequently called upon at extremely short notice to handle claim-related matters which fell outside the panel’s corporate mandate.

Additionally, the SIU revealed that the RAF’s average claim settlement rose by 151.6% during its 2023/24 financial year to R286,825, compared to just R114,008 during 2018/19.

This rose even higher to R348,100 during 2024/25, with this largely being attributed to the RAF’s legal backlog, as well as its inability to defend court matters resulting in default judgements.

The total amount of default judgements issued against the RAF for legal fees and costs over the last four years was estimated at R15.7 billion.

Between April 2022 and May 2024, there were 7,559 default judgements filed against the RAF in the Pretoria High Court alone.

“The Committee finds that the Board failed to meaningfully engage with the matter of legal costs and accordingly did not put into place any mitigating measures,” SCOPA said.

“Management appears to have accepted that legal costs had reduced since the dissolution of the Panel of Attorneys without taking into account that the legal cost per claim had in fact substantially increased.

The RAF has frequently received criticism for its approach to litigation, with one judge describing it as “chaotic” during a 2025 High Court hearing.