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Over 100 law firms, including sheriffs, are being investigated for looting R340m in state funds by submitting duplicate claims to the Road Accident Fund.
The Special Investigating Unit (SIU), which has been investigating the case since 2021, has now referred 12 law firms or legal practitioners to the National Prosecuting Authority (NPA) for criminal prosecution consideration.
This was revealed by the SIU on Wednesday as it gave the standing committee on public accounts (Scopa) an update on investigations, saying R317m had been recouped.
SIU’s chief national investigations officer Leonard Lekgetho
detailed how these duplicate payments were effected by the sheriffs who executed upon writs of execution and received funds on behalf of the instructing attorney.
“The RAF has a payment system which dictates that when a claim offer is accepted whether by settlement or by a way of a court order, such claim will await 180 days before it is paid.
“As a result, the attorneys would then attach the RAF bank account by the way of writs of execution served by the sheriff, causing the RAF bank to effect payment in terms of the writs upon the 180 days lapsing, the same claim would be paid again, thus constituting duplicate payment,” Lekgetho said.
He said when approached with the evidence, several legal practitioners opted to cooperate with the investigation by signing acknowledgments of debt (AOD).
“In the duplicate payments alluded to acts of criminality were founded wherein trust fund monies were misappropriated. Among those are law firms that have signed AODs with the SIU. Other firms opted to pay directly to RAF, however the proof of payments depict that the funds were paid from lending institutions or other accounts other than the Trust accounts.”
Lekgetho said by law, the monies were supposed to be kept in a Trust account but the fact that these were paid from other institutions was indicative of misappropriation of the Trust accounts.
“To date, the SIU has signed AODs to the value of R70m with actual amount recoveries to date amounting to R41m. The SIU through its investigation has reconciled the total monies paid directly to RAF to the amount of R276m thus far.”
The SIU said there were attorneys who received duplicate payments and have since been struck off the roll.
Some have been suspended while others have since passed away.
Currently, there are five practising practitioners who have been referred to the Legal Practice Council (LPC).
The SIU further flagged procurement and tender irregularities. It is also probing payments made to service providers and the possible inflation of invoices by service providers.
One of the contracts flagged under procurement and tender irregularities that the unit is probing is the cancellation of the panel of attorneys contract in 2020.
Sowetan understands that the RAF’s legal unit is under-capacitated and the fund was unable to defend all cases in court.
“The total amount of default judgments issued against RAF for cost and fees from 2018 until second quarter of 2023 amounts to R4.7bn.
“A sharp increase on the default judgments is noted between 2021 and 2022. There was a matter where a claimant was awarded a default court order amounting to R11m which RAF failed to honour on time, which led to this accumulating amount of interest worth around R500,000, which was paid out in respect of the claimant.”
The investigation is expected to be concluded in 2024.
LPC spokesperson Kabelo Letebele said instances such as misappropriation of funds and fraud are usually referred to court where the LPC applies for suspensions and more often for the legal practitioner to be struck off the roll.
He said the LPC is investigating 8,000 to 12,000 cases, with over 80% of them finalised in three to six months and within the year of the complaint being made, while others take longer.
“On average, there are 30 to 50 legal practitioners that are struck off and up 100 practitioners on suspension subject to court proceedings and finalisation of cases for every year.
“Suspended or struck off practitioners cannot practise as lawyers and members of the public can check our website to check status of a legal practitioner,” Letebele said.
He said where there was a guilty finding of misappropriation and the legal practitioner (at the time of handling the matter) had a valid Fidelity Fund Certificate (FFC), then the complainant can apply to the Legal Practitioners Fidelity Fund for a possible payout of their funds due to them from the insurer for amounts not exceeding R5m.
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