The Road Accident Fund (RAF) brought an urgent application in the Gauteng High Court (Pretoria) this week against the Sheriff of Centurion East, Absa Bank and 346 claimants that have in the last six weeks sent the sheriff to attach all the monies in its eight Absa bank accounts, according to a report by Tony Beamish on the Moneyweb site.

The application is in two parts: In Part A the RAF is asking the court for breathing space. It wants the court to suspend its obligation to pay almost R174m overdue to the 346 claimants. In Part B the RAF asks for an order against itself that it pay the above amount by no later than 29 February 2020. It also seeks an order that it be relieved from paying court-awarded compensation to claimants before a period of 180 days from the date on which a court order is served on it.

The founding affidavit deposed to by the acting CEO of the RAF, Collins Letsoalo, paints a stark picture of how hopelessly insolvent the RAF really is and suggests that, failing a government bailout and a radical plan of action, the black hole will simply deepen.

Noting the RAF does not generate its own funding but is reliant on the Road Accident Fund levy (currently R1.93 per litre of petrol or diesel) he told the court that settled claims accrue at an average of R4.3bn a month and the RAF’s sole income – from the fuel levy – is R3.5bn.

He said: ‘It is clear that the RAF is by law burdened with extraordinary liability which exceeds the money allocated to it by law. This makes it impossible for the RAF to satisfy all judgment debts granted against it.'

At the date of his affidavit (28 November), he said the RAF owes its claims creditors 'not less than R17bn'.

To put the road accident payment crisis in perspective, notes the Moneyweb report, claims against the fund accrue at R14,137,416 per day, R589,059 per hour, R9,817 per minute and R164 per second.

Letosalo stated in court papers that ‘the RAF does eventually pay all judgment debts against it’ and that no purpose was served by attaching bank accounts as there was already a queue of claims creditors and that by doing so ‘it only serves to cripple the RAF’s operations and ability to ensure that there is an equitable order of paying judgment debts’.

He noted the RAF’s head office in Pretoria is in possession of more than 1 000 writs (some for multiple claims), and some are for ‘millions of rands’.

Not only does the sheriff beat a trail to the RAF’s HQ every day with more writs but other sheriffs serve writs on the RAF’s regional offices on a daily basis.

Full Moneyweb report

Affidavit