The Road Accident Fund (RAF) is considering withdrawing its contentious court case involving a dispute with the Auditor-General over the accounting standards.
This emerged when the board of the RAF, the executives, and Deputy Minister Mkhuleko Hlengwa appeared before the Portfolio Committee on Transport at a marathon meeting on Wednesday night.
The entity has signed papers to be lodged with the Constitutional Court after the President of the Supreme Court of Appeal (SCA) turned down their petition following the Pretoria High Court decision that dismissed RAF’s application to review and set aside the A-G’s 2020/21 disclaimer audit report.
It undertook the legal action despite the Transport Department instructing it to find a solution to the dispute that was sparked by an audit finding that its use of the International Public Sector Accounting Standards 42 RAF was inappropriate and significantly different from the South African Standards of Generally Recognised Accounting Practice.
Briefing the committee on Wednesday night, board chairperson Zanele Francois said the board was looking at options to exit the court proceedings.
“We were given 21 days to do a risk assessment and impact analysis so that if we go out of court and find other amicable ways to resolve the problem,” Francois said.
She also said the Transport Ministry was willing to work with the RAF once they had done the proper risk assessment and impact analysis.
“There is going to be a serious impact on the business of the RAF because there are other legal implications around that decision,” she said.
Hlengwa confirmed that the RAF board made the request.
“The board has arrived at a determination, and they want 21 days, and we granted those 21 days to see how we, in a responsible manner, facilitate the withdrawal of the court action and apply the standards as it is and at the same time, find appropriate standards.”
Hlengwa was due to meet the Accounting Standards Board on Thursday to fast-track the completion of the appropriate accounting standards for the RAF.
“I want to reiterate the position of the ministry on that matter. We don’t believe that the RAF should be in court on this matter. We have communicated that clearly and firmly, and we have been met with a response, which is simply a NO.”
Hlengwa noted that the RAF was in the Constitutional Court after the SCA judgment, and that action was taken without the support of the ministry.
“That support won’t be forthcoming. Because we believe this is a matter that, after three adverse court judgments, should not be proceeding,” he said.
He confirmed that the decision to take the matter to the apex court was taken with dissent within the board.
“As a result of that decision, the papers to the court, I am advised, were signed by the CEO, not the chairperson of the board, whom I am told was not in agreement with onward proceeding to the Concourt and, therefore, the board resolved to delegate the signing of the papers to the CEO.”
This was dismissed by the executives who were at the board’s meeting, saying there was no dissent within the board.
CFO Bernice Potgieter said: “The board voted on continuing and there was no dissenting vote. After that, she had doubts.”
Francois confirmed that the board decision was reached after questions raised were not answered at the meeting, and the CEO was appointed to sign the papers instead.
“I did make it clear that if my questions are not answered, I would not be able to sign because I am not comfortable with the decision,” she said.
The turn of events comes amid Transport Minister Barbara Creecy announcing last month that she was considering a financial misconduct investigation into the board for pursuing the ongoing litigation against the A-G.
The RAF has raked in a massive R10.8 million in legal fees to date.
Creecy told Parliament that she and Hlengwa were on record stating that the RAF should not proceed with the legal action.
“And should they do so, I will initiate a financial misconduct investigation into the board as this might constitute a violation of Section 83.1 of the Public Finance Management Act,” she said during a question-and-answer session.
In a recent parliamentary response, Creecy reiterated that the board was directed to refrain from pursuing the legal action further.
“The Minister and Deputy Minister have made it clear to the RAF that the RAF should stop legal challenges related to the Auditor-General of South Africa. The RAF must adhere to existing accounting standards because the accounting standards policy adopted by the RAF was not approved by the Accounting Standards Board,” she said.
