/ 2 November 2001

Top road fund official quits

The troubled Road Accident Fund cannot seem to steer clear of controversy

Nawaal Deane

The deputy chairperson of the cash-strapped Road Accident Fund this week announced his resignation amid internal clashes and allegations that his own firm’s work for the fund constituted a conflict of interest.

The controversial selection of an assessor who has a criminal record and is being investigated for murder to work for the fund, has also added to the discord.

In a confidential memorandum sent to management two months ago, the Pretoria regional committee of the fund expressed dissatisfaction with the inclusion on the panel of a firm that has, as one of its partners, the board’s deputy chairperson, George Maluleke. He announced his resignation this week after the Mail & Guardian queried him on his alleged conflict of interest.

Maluleke’s firm has been involved in plaintiff cases against the fund. He said this week that since his appointment as deputy chairman there has been considerable media debate as to whether there was a conflict of interests.

“However, I no longer wish to subject myself to unfounded attacks and therefore decided earlier this month to resign from the board of the Road Accident Fund with effect from October 31.”

Apart from Maluleke’s own alleged role, the Pretoria regional committee has said that a director of an assessors’ firm, Willie Mkhonza, would not be “suitable” to act on behalf of the fund because he had been convicted of fraud and was being investigated for murder. His firm was earlier recommended by the fund’s committee for transformation and empowerment to act on behalf of the institution.

The fund pays out from a kitty sustained by a levy on the fuel price. Its transformation process required the drawing up of permanent panels of service providers to ensure that previously disadvantaged professionals would be included to act on behalf of the fund.

The M&G reported in June that a handful of black professionals would stand to benefit from the new policy of panels if preference was only given to previously disadvantaged professionals, effectively excluding the large, established group of predominantly white experts who have specialised in work for the fund.

At the time the fund said the new policy was a temporary move, and that its permanent panels of approved professionals would not exclude any professional based on race. The new lists include both previously disadvantaged and white professionals.

According to a memorandum dated July 5, the Pretoria regional committee was appointed to review suitable candidates for the panels of service providers.

The memorandum addressed the newly appointed chief executive officer, Humphrey Kgomongwe, and chairman of the fund, Kessie Naidu, pointing out that Mkhonza’s firm was in their opinion “not suitable” to be placed on the panel because of his criminal record.

The regional committee enclosed Mkhonza’s record. The committee found that Mkhonza had been convicted of fraud and reckless driving.

It also shows that Mkhonza is being investigated for fraud, robbery and murder. The committee could not verify the other “outstanding cases pending trial” against him.

“We nevertheless felt it incumbent on us to advise you of the above [Mkhonza’s criminal record], in order to avoid embarrassment to the board and to the fund,” said the committee.

On September 26, the list of assessors was sent out to all regional managers without the name of Mkhonza & Associates. But last Thursday a “CEO directive” sent to all regional managers stated: “With immediate effect the firm of Mkhonza & Associates is placed on the Pretoria panel of investigators.”

Sello Mokale, acting CEO, said that the information on Mkhonza had not been revealed to the fund as part of the “predetermined selection process It is not correct to conclude that the fund had full knowledge of Willie Mkhonza’s criminal record.”

He said that until a review of the matter can take place it is unfair to discriminate against Mkhonza “who otherwise merited appointment on account of his exceptional record and experience” on the basis of “unverified information” that had not been included in the pre-selection process. “This unique and unforeseen circumstance is therefore under special consideration and review. It is anticipated that a decision will be taken by the Board soon,” he said.

The regional committee also took exception to Maluleke’s newly merged firm of attorneys being placed on the panel. Seriti, Mavundla & Partners, which was named to the panel; recently merged with Maluleke, Makume and Matlala to form MSMM.

“The regional committee is also concerned about the implications and possible conflict of interest with appointing the said firm, having regard to Mr Maluleke’s involvement on the board, and as a plaintiff practitioner,” said the committee.

Mokale says that the issue of conflict of interest will be reviewed over the weekend. “The factual position is that the firm of Seriti, Mavundla & Partners were selected to serve on the Fund’s panel of attorneys, and subsequent to such selection the firm merged to become MSMM.” The merger is subject to a review by the board.

Maluleke confirmed that he is part of the newly formed firm MSMM. “Our new firm has not been appointed to the panel of attorneys for the Road Accident Fund. The firm of Seriti, Mavundla & Partners is on the panel of attorneys appointed by the Fund and has been so for many years, long before I was appointed to the board,” he said.

He said he did not seek appointment to the board but agreed to take it after being approached by the Black Lawyers Association to serve.

“My role on the board is a non-executive one and I have never sought to influence in any way, the day-to-day activities of the fund.

“During my appointment I have never acted for the fund.I am also aware that my involvement in a new legal firm might intensify the debate about conflict of interest,” he said.

Mokale added that it is the concern of the fund that information related to internal operations is made available to outside parties in a “clandestine” manner. “We are worried about the real intentions of sources of such information.”