RAF executives must be charged for misleading Parliament – Alf Lees

DA MP says the accounting standard used falsified the RAF’s debt profile by as much as 90%

Road Accident Fund executives must be charged for misleading Parliament

7 February 2024

The DA will be pursuing charges against Road Accident Fund (RAF) executives, under the Powers, Privileges and Immunities of Parliaments and Provincial Legislatures Act, 2004, for misleading Parliament by repeatedly insisting on using an accounting standard that falsifies the RAF’s current debt profile by as much as 90%.

RAF CEO, Collins Letsoalo, and the RAF Board are asking Parliament to exercise its oversight role on financial statements that are misleading and do not reflect the true nature of RAF’s debt position, which at this point is estimated to be R300 billion. Such misrepresentation of information essentially amounts to fraud.

Courts have previously ruled that presenting false information to Parliament is fraud, stating that “If Parliament is misled, or if individual members thereof are misled, whether expressly or by the withholding of information that must be disclosed, it stands to reason that they have been defrauded if the intention to mislead was present in the mind of the perpetrator.”

By refusing to discard an accounting standard called the Generally Accepted Accounting Standards 3 as instructed by the Auditor General (A-G) and National Treasury, the RAF – under Letsoalo, may have presented falsified financial statements to Parliament on the entity’s debt profile.

Section 17 (2)(e) of the Powers, Privileges and Immunities of Parliaments and Provincial Legislatures Act, 2004 provides that “A person who…wilfully furnishes a House or Committee with information, or makes a statement before it, which is false or misleading, commits an offence and is liable to a fine or to imprisonment for a period not exceeding two years or to both the fine and imprisonment”.

The A-G has warned that the use of the Generally Accepted Accounting Standards 3 by the RAF, instead of the prescribed accounting standard called the International Financial Reporting Standards (IFRS), for the 2021/2022 financial year, misrepresents its financial standing and could be covering up a debt liability of R300 billion.

Despite Parliament’s Standing Committee on Public Accounts (SCOPA) pointing out the deviation on RAF’s continued failure to use the prescribed accounting standard, Letsoalo and the Board have instead arrogantly chosen to take the A-G to court to enforce the continued use of the new accounting standard.

For an organisation that is under immense financial stress due to a heavy debt load, it is a gross abuse of public resources for Letsoalo to spend money on significant legal costs on a flimsy campaign to protect a discredited accounting standard. The RAF executives have shown that they would rather spend money protecting the manipulation of debt liabilities rather than meet the needs of road accident victims.

There is a strong basis for charging the RAF Board of Directors, including the CEO, with dereliction of duty and declaring them delinquent directors under the Companies Act. The RAF Board lacks the competence necessary to rectify the issues plaguing the fund.

Issued by Alf Lees, DA Member of SCOPA, 7 February 2024