RAF Under Fire: Why Accountants Should Be Paying Attention
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181 court orders ignored. A R92 million Sunshine Hospital payout. A judge floating a personal cost order against the former CEO. Parliament's Standing Committee on Public Accounts (SCOPA) is now considering criminal charges against former Road Accident Fund (RAF) CEO Collins Letsoalo and the fund's board, and the attorneys who advised them are not off the hook either.
At its 15 May meeting, SCOPA members on both sides of the aisle were blunt. ActionSA's Alan Beesley offered to personally accompany SCOPA chair Songezo Zibi to lay charges, calling Letsoalo "a wrecking ball" on the RAF, the courts, employees and service providers. DA member Patrick Atkinson said the RAF's conduct went beyond fruitless and wasteful expenditure and "is almost criminal liability", with money spent on legal fees "like a drunken sailor". ANC member Helen Neale-May pointed directly at the legislation: "Personal liability is in the PFMA, and is something that we should really put in our recommendations in the report."
The committee also signalled that the legal advisors who counselled the RAF on its endless stream of court applications should not assume they are insulated. As Neale-May put it: "Failure to comply with court orders is not an administrative error. It's a breakdown of the rule of law requiring personal accountability."
Why this is an accountant's problem too
The RAF saga is not just a transport story. It is an accounting governance failure that is now testing how far personal liability under the Public Finance Management Act actually reaches. For business accountants in commerce, in practice, and serving public entities, the lessons are unavoidable:
PFMA Section 38 obligations cannot be delegated upward.
Effective financial management, prevention of irregular expenditure, and transparent internal controls sit with the accounting officer personally. "I was instructed to" is not a defence under the PFMA, and not under PRECCA either. Read CIBA's analysis of exactly this issue is set out in Government Said Sign It. The PFMA Says Otherwise.
Know the difference between irregular, unauthorised, and fruitless and wasteful expenditure.
They are three separate statutory categories triggered by three different failures, with three different consequences. A single transaction can fail all three tests independently. If you prepare or audit financial statements of a public entity, this is non-negotiable. CIBA breaks it down in Irregular, Unauthorised, Fruitless: Three Different Disasters.
Record your objection in writing.
When you are told to process a payment or sign off on expenditure you believe is irregular, get it in writing. "This would constitute irregular expenditure" is a sentence that breaks normalisation and creates a paper trail. The Protected Disclosures Act and PRECCA Section 34 are there for a reason.
Advisors are not immune.
SCOPA is openly considering action against the attorney firms that advised the RAF. If lawyers can be held to account for enabling a runaway litigation strategy, accountants and auditors who sign off without challenging clear PFMA breaches should expect similar scrutiny.
Accounting choices travel.
The RAF previously tried, and failed, to change its accounting standards to reduce reported liabilities by shifting from IFRS 4 to IPSAS 42. The Auditor-General called it a material misstatement, and the Gauteng High Court agreed. Read more in our article: Road Accident Fund's Failed Bid to Change Accounting Standards. Choices that look defensible in the boardroom often look very different on the bench.
The bigger picture
The RAF takes in roughly R48 billion a year from the fuel levy. According to SCOPA's own analysis, running the proposed Road Accident Benefit Scheme (Rabs) Bill in parallel with the current fund would cost between R70 and R80 billion a month. The fund's insolvency, the legal-fee bonfire, and the looming criminal charges are all symptoms of the same problem: governance and accountability that did not hold the line.
That is the gap CIBA-trained business accountants are built to close. Whether you work inside a public entity, audit one, or advise an SME that contracts with one, your judgment and your paper trail are the difference between a clean audit and a personal cost order.
When the courts start naming individuals, the accountant who flagged the risk in writing is the one who walks away clean.
Source Article: Moneyweb