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Road Accident Fund may be SA's biggest fraud victim

Published Jul 16, 2004

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Cape Town - With fraudulent claims expected to have totalled more than R1 billion a year, the Road Accident Fund could turn out to be "the biggest fraud story in South African history", acting chairman Saths Cooper said yesterday.

Addressing a packed meeting of anxious lawyers, road accident victims and medical professionals at the start of a road show to get ideas on how to solve the problems facing the state-run fund, Cooper said it would take time to sort out the extent of the fraud involved and how best to introduce a fraud-free system.

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Cooper said the fund, which had paid out about R30 billion in claims since it was established in 1996, was undergoing high-level audits to determine the exact extent of the fraud involved.

Although initial estimates from the auditor-general's office indicated that fraud in the R4 billion-a-year fund could be R500 million, the fund believed this could be closer to R1 billion a year.

Cooper, who took over when the board was suspended last month amid escalating claims of fraud and mismanagement, said recent arrests had highlighted the need to "sharpen our processes" in verifying and paying claims quickly from accident victims and the medical and legal professions.

Some at the meeting complained that it had taken up to seven years for genuine claims to be paid out while fraudulent claims were settled quickly. Fraud had probably been encouraged by the fact that its "benefits are too rich and the premiums are too low", said one lawyer.

Many believed that the recent suspension of the executives had broken down a trust in the fund that had taken years to build up and would now take even longer to restore. Reports that the fund was on the verge of bankruptcy had not helped to build confidence.

The fund's only source of revenue is a 26.5c slice of the R1.425-a-litre levy imposed on petrol and diesel. Suggestions that this be increased at the cost of consumers have been widely rejected.

Cooper said the only solution was to reduce the incidence of fraud and the number of lawyers keen to lodge claims.

The feeling of entitlement among some people that they were owed compensation even if they had not been injured or had only witnessed an accident had to be stopped.

Suggestions on how the running of the fund could be improved should be sent to

[email protected], he said.

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