Fund sues itself to stop dodgy 'death' claims

27 September 2015 - 02:00 By PIET RAMPEDI, MZILIKAZI wa AFRIKA and STEPHAN HOFSTATTER


Lawyers representing the Road Accident Fund made a fortune by suing the fund on behalf of dead "claimants" whose relatives knew nothing about the lawsuits. An internal RAF audit report - seen by the Sunday Times - exposes the irregularities, wasteful and fruitless expenditure, alleged collusion and potential fraud involving officials and lawyers on the fund's approved panel of legal service providers.story_article_left1The rot has forced the Hawks and the Law Society of the Northern Provinces to institute probes into 700 cases in which the RAF instructed its lawyers to sue the fund to interrupt the prescription of dozens of claims, the condonation of prescribed cases and the initiation of claims on behalf of claimants without their knowledge.The damning audit report, compiled by RAF chief audit executive Rodney Gounden and handed to CEO Eugene Watson and chief operating officer Lindelwa Jabavu on June 12, also found that:• The RAF has no policy that deals with claims that fall outside the prescribed period;• RAF lawyers issued summons to change the prescription period, only to realise later that a claimant had died long ago, resulting in fruitless and wasteful expenditure;• The fund's failure to process claims on time was costly to taxpayers;• The RAF failed to process some claims even after issuing summons to stop prescriptions;• In a number of instances, the summons were neither in the claim file nor captured on the claim system but payments were made, resulting in inadequate audit trails;• In one instance, the RAF instructed a lawyer to issue a summons long after it had been served on the fund, which made auditors' work difficult; and• The RAF failed to inform the supposed plaintiffs that it had sued itself on their behalf.These incidents resulted in "fruitless and wasteful expenditure", as well as "poor service delivery", according to the audit report.The RAF was established in 1996 to compensate victims of road accidents for death or injuries sustained.For years, the fund has failed to pay victims on time because its finances are a shambles.RAF board chairman Ntuthuko Bhengu said in April that there was a "payment queue" amounting to R6.7-billion for "settled matters which will be honoured as the fuel levy flows in".block_quotes_start 90 forensic officials, who have ... [arrested more than] 500 fraudsters, including some lawyers, doctors and claimants block_quotes_endDA MP Chris Hunsinger, who filed a fraud complaint against RAF officials and lawyers, last week submitted an affidavit to the Hawks' specialised commercial crimes unit.In his affidavit, which Sunday Times reporters have seen, Hunsinger says he was approached by Van Zyl le Roux and Hurter Attorneys - acting on behalf of two people - to investigate "fraudulent acts" allegedly being committed by RAF staff.RAF officials, according to Hunsinger's affidavit, were involved in unlawful and intentional misrepresentation because the law did not make provision for the fund to represent the public.story_article_right2"The ... misrepresentation results in the potential prejudice to [the claimants] or the public in that they may incur legal costs, and their claim will not be dealt with by attorneys who have a lawful mandate to act in their best interests," Hunsinger says.The RAF's "suing itself" "deliberately escalates" expenses and "hugely inflates" the burden to maintain the fund's cash flow, he adds.Bhengu has rejected the DA's claims as "sensational" and "scurrilous", saying it was unfortunate Hunsinger had chosen to politicise the matter.Bhengu conceded that "fraud and corruption remains a long-standing challenge", but insisted the fund had implemented measures to uproot the rot."This has been demonstrated by the establishment of a fraud unit now comprising 90 forensic officials, who have ... [arrested more than] 500 fraudsters, including some lawyers, doctors and claimants."RAF spokeswoman Linda Rulashe said the fund had implemented the audit report's recommendations.Rulashe said the RAF and the law society "have continued to engage on the matter", but she had "no knowledge of an investigation by the Hawks".National Prosecuting Authority spokesman Luvuyo Mfaku said it was still waiting for the docket from the Hawks. He referred queries to Hawks spokesman Brigadier Hangwani Mulaudzi, who failed to provide comment.investigations@sundaytimes.co.za

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