Ivor Powell
Two legal firms with connections to the former claims executive of the Road Accident Fund (RAF)were given large volumes of legal work contracted out by the fund.
Former RAF claims executive Johan van Oudtshoorn – who was appointed internal audit executive for the fund after August 1998 – was involved in contracting out legal work worth millions of rands to a firm in which he had been a partner.
Van Oudtshoorn resigned from his partnership in the Johannesburg firm, which was reincorporated as Hofmeyr, Herbstein, Gihwala, Cluver and Walker Incorporated in December 1993, when he took up his position with the RAF. But the firm continued to be awarded substantial contracts.
According to RAF financial records, an even greater volume of work was handed out to a Pre- toria firm, Gildenhuys, Van der Merwe Incorporated. The firm’s personnel manager confirmed that there was an ongoing association with Hofmeyrs – though she could not specify exactly what that association was. Earlier, the Pretoria firm was known as Gildenhuys, Van der Merwe and Hofmeyr.
During the 1997/98 financial year, Gildenhuys, Van der Merwe Incor- porated handled 400 cases on behalf of the RAF. Hofmeyrs were given just over 100 cases in the same period. In the 1998/99 financial year, the picture was virtually the same. This was at a time when the government was moving to distribute RAF work more evenly throughout the legal profession and was bringing in black-owned firms to represent the fund.
Other white-owned firms did even better. In the same period, Dyason in Pretoria handled about 700 cases for the fund – more than a tenth of the total number of legal cases handled by the RAF.
No precise figures are available on how much the contracts were worth. But the total amount of money written off to expenses in the 1998/99 financial year was nearly R250-million. Of this, more than R150-million went to attorney’s fees.
Acting chief executive officer for the RAF, Chris Greenland, said there was nothing necessarily irregular about the way the work was handed out.
“Firms were employed on contract,” he said. “They were retained for purposes of litigation on the basis of legal expertise in the particular field.”
Greenland said in the old system it was at the discretion of the fund’s executives who would be appointed to handle a particular case.
He admits there “have been cases where what you might call hired guns were brought in to inflate legal costs and drag out proceedings in the past, so more money could be made”.
He also concedes that there was a racial bias, with “certain companies being advantaged to the detriment of other firms contracted to the RAF”.
However, Greenland has introduced major changes since joining the RAF in August last year. He selected around 20 firms from more than 300 which tendered to the RAF at the beginning of 1999. These firms are allocated work on a strictly rotational basis.
Another intervention came in the form of a pilot project aimed at exploring arbitration as an alternative to court proceedings. Greenland said the introduction of an arbitration system could save the RAF around R75-million in legal fees.
Van Oudtshoorn left the RAF in September this year. At the time he was embroiled in another controversy in his capacity as the RAF’s appointed investigator into allegations of legal irregularities around the administration of the fund.
Lawyers from the Personal Injury Lawyers Association rejected his role as investigator, claiming they could not be sure of his impartiality.
The RAF is currently the subject of two official inquiries – one into allegations of malpractice on the part of lawyers acting for accident victims, and the other into how the fund has been run with a view to restructuring it.
Van Oudtshoorn could not be reached for comment at the time of going to press.