RAF in corruption, identity theft claims
AN INTRICATE web of corruption and claims of identity theft involving the Road Accident Fund (RAF), the City of Johannesburg (CoJ) and Investec Bank has been uncovered after a Pretoria-based law firm discovered that the RAF allegedly had 16 bank accounts with Investec Bank under two profiles.
The scandal was revealed after an innocuous bank attachment by the law firm, which was seeking to secure money which was owed to its clients by the RAF. It is suspected that the money which was meant for claimants was deposited into these suspicious accounts held at Investec Bank to hide the funds from the rightful owners, the claimants.
On December 31, 2019, the RAF had claims to the value of R17.2 billion that were finalised, but could not be paid due to financial cash-flow challenges, and liability grew to R293bn, as stated in its Annual Performance Plan 2020-21.
Documents seen by Independent Media’s investigations unit show two profiles for bank accounts with the RAF reference, with the first profile named “The City Of Johannesburg/ Road Accident Fund” under which there are three accounts. This profile was declared to belong to the CoJ even though the name contravenes the Financial Intelligence Centre Act (Fica) and poses as a suspicious account. It also contravenes the Fica principle of “know your client”.
The second profile was named “Road Accident Fund Pty Ltd 1992/002160/07”, under which there are 13 accounts.
This profile was confirmed by Investec as belonging to the RAF, as seen in email correspondence from Investec Bank.
When reached, an Investec spokesperson said Investec and the City of Joburg had provided evidence that the disputed accounts were not held by the RAF.
“An application brought urgently by the lawyer and opposed by the City of Johannesburg, RAF and Investec was heard in the high court, Pretoria, and the lawyer’s version was dismissed with punitive costs against him.”
The RAF, through its chief executive, Collins Letsoalo, confirmed the existence of the accounts.
However, he said the accounts were dormant and had been dormant for years.
This was contrary to what he had previously said in a TV interview, where Letsoalo flatly denied the existence of these accounts.
Apart from Letsoalo, other executives allegedly at the forefront of the scandal are finance manager Sefotle Modiba and acting chief financial officer (CFO) Boitumelo Mabusela, who were allegedly unilaterally appointed by Letsoalo during the lockdown.
Notably Mabusela was appointed when there already was an acting CFO within the organisation who had been appointed internally by the previous board. Mabusela was a director at Intersite – a company whose identity was allegedly stolen by the RAF when opening an account with Investec.
RAF spokesperson William Seripele Maphutha said since Letsoalo’s secondment and subsequent appointment as RAF chief executive he had never opened any bank account, with any bank, and he simply could not open a bank account for the RAF without the approval of the RAF board and National Treasury.
“We are not aware of any case including the one you mention in your inquiry that has been opened against the CEO and other RAF officials. We are consequently also not aware of any case being transferred to the Hawks.
“We are, however, glad that finally these rumours and spurious allegations are now reported to the law enforcement authorities and the pedlars of these rumours and allegations have finally come under oath,” he said.
The matter of identity theft by the RAF was brought to the attention of the Financial Sector Conduct Authority, which declined to take action and referred the matter to South African Reserve Bank Prudential Authority, which in turn also referred the matter to the Ombudsman.
Independent Media’s investigations unit also established that Investec Bank, the Presidency, the Minister of Transport, Intersite, the Prasa board chairperson and the City of Joburg were notified about these illegal activities. However, nothing substantial has happened to bring those involved to book.