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QUESTION:

Whether any steps have been or are being taken to bring to book persons allowing motoring accident victims to be defrauded by unscrupulous legal firms; if not, why not; if so, what steps?

PART I:

Madam Speaker, we have indeed taken firm and decisive steps.

Last week, on 17 March, the President by proclamation empowered the Heath Special Unit to investigate the defrauding of road crash victims since 1 January 1990 and to recover the money which has in effect been stolen from them by their lawyers.

The defrauding of road crash victims has been an open secret in legal circles for years, though to date the fraternity has refused to acknowledge or do anything to stop it bar action against a handful of lawyers.

We do not know the full extent of the problem because these practices take place after the settlement of a claim has been reached between the victim's legal representative and the Road Accident Fund.

But we know that of the Fund's annual claims budget of R1,386 billion about 20,5% (R284 million last year) is spent on settlement costs.

On top of this comes attorney-client and own costs which is not disclosed as it is between the victim and his/her lawyer.

We estimate that it further reduces the money paid to the victim to less than 70% of the award.

This means that between 30% and 40% of that revenue goes on settlement and legal costs, and not to victims.

In my term as Minister of Transport both my office and the Road Accident Fund have received countless complaints and queries from victims whose lawyers had not even informed them of the total settlement awarded by the Fund on their claim.

In response, we recently did a limited study of 143 cases involving 18 law firms that had come to our attention. Of the almost R15 676 925 paid out in settlements by the Fund, the 143 victims claimed that they received just R7 038 125.

This means that on average 56% of the award was kept by the lawyers. In six cases the lawyers kept 100%, and in 42% they kept more than 65% of the awards.

Madam Speaker, approximately 10,000 people die on our roads every year, a quarter of a million are injured (50,000 of them seriously). This is the potential scale of the problem.

That is why the central issue now is to recover the money stolen from the victims. They must be our first priority as all too often they are poor and disadvantaged with no other means of support.

PART II:

The challenge now also clearly lies with the legal profession.

In my five years as Minister we have sought to engage the legal fraternity on ways in which we could restructure the Fund in order to best serve the interests of victims as well as clean up dubious practices such as the touting for work at hospital beds and in trauma units where victims are no state to make decisions let alone sign documents.

Through three White Papers, countless drafts, workshops, hearings and meetings the legal fraternity has fought to maintain the status quo and block any change to the operation of the Fund to speed up the settlement of claims and bring early relief to victims.

The status quo cannot continue to exist as it is a scam that involves lawyers as well as some medical practitioners and assessors in a R500-million-a-year business bankrolled by taxpayers.

I have a list from the Road Accident Fund of matters referred to three Law Societies for investigation:

In the Transvaal, eight firms involving 69 claims were brought to their attention. To date they have taken action against one lawyer.

In the Cape division, three firms involving 12 claimants.

In the Free State, one firm involving nine claimants.

There are a further 369 cases from 21 law firms being investigated by the Fund following complaints and the Fund is of the view that at least 66 law firms require investigation.

Since 1988, 84 individual cases have been referred by the Fund to the police for criminal investigation and charge sheets are currently being drawn up against three firms on 34 cases.

In the face of this the legal fraternity has been remarkably silent.

Concerned about this, I recently met all four provincial presidents of the Law Societies to ask them for a clear framework of what is acceptable practice in the legal fraternity.

We are not trying to deprive anyone of a legitimate income; we are not trying to take bread out of anyone's mouth.

To date I await a response. But one thing is clear: the time of feigning ignorance about unscrupulous legal practices is over.

I am also having discussions with the Minister of Justice on how we can regulate compensation to road crash victims.

If the legal profession is to have credibility in this country it must enter this debate with the clear understanding of the imperative of placing the victim of a road crash at the centre of discussion, to make sure that the victims' interests are paramount and are dealt with first and foremost.

PART III: (if you need additional points)

In conclusion, it is important to reiterate that the Heath investigation is totally separate from the commission of inquiry into the Fund itself.

I am currently consulting with numerous parties to submit a recommendation to the President next month on who should serve on this three-person commission that will look at the long-term restructuring of the cash-strapped Fund.

I look forward to the results of the Heath investigation as it will not only return the compensation to its rightful victims, but it will also give us an accurate indication of the extent of the problem and how to move forward.

In my term as Minister of Transport I have been made mindful of the vital role that the Road Accident Fund plays in our society as it is often the only safety net for people disabled after road crashes and in many instances, through no fault of their own.

But we must always remember that the Road Accident Fund exists in order to provide compensation and benefits in the event of the injury or death on our roads; and not to enrich the legal profession.

Issued by: Didi Moyle, PA and Media Liaison Officer to the Minister of Transport
cell: 082 808 5108

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