RAF blows millions in dodgy call centre deal

Senior Road Accident Fund (RAF) officials terminated an internally operated call centre that cost R25m a year to run and replaced it with an external service provider, Alteram Solutions, that cost the state-owned entity R199m over 13 months.

The contract, which was concluded outside of normal procurement processes in 2023, was extended last year for 24 months, again without inviting competitive bids, at a cost of R307m. Total payments to Alteram currently stand at R297m.

The initial contract, concluded in 2023, and a subsequent 24-month extension, were awarded without a public tender or inviting competitive bids.

The RAF’s business case for the new customer relationship management (CRM) system justified the change by claiming the old call centre was “not fit for purpose” due to alleged nonresponsiveness, a lack of knowledge among agents, a high rate of repeat calls, and the lack of a central query-handling system. It also cited a recent customer survey showing stakeholder dissatisfaction.

However, an anonymous RAF insider ― in a letter written to parliament ― countered the executives’ justification as “simply not true”.

The insider provided detailed performance indicators stating that the RAF call centre consistently published key performance indicators showing:

• calls answered rose from 320,000 to 436,000;
• abandon rates were typically between 1.8% and 3%; and
• annual surveys indicated overall satisfaction ratings of “good” to “excellent”, with the 2019 average score being 2.6/3.

The insider lamented the cost of the outsourced CRM system, noting the RAF spent a fraction of what it cost on the previous call centre, and also claimed the new system was “fraught with issues”.

Claimants, attorneys and service providers report unanswered calls, conflicting information, and referral back to RAF regional offices

—  Anonymous RAF staff member

“Claimants, attorneys and service providers report unanswered calls, conflicting information and referral back to RAF regional offices,” the insider’s letter said. “The outsourced provider conducts its own QA [quality assurance] and surveys, introducing bias and reducing accountability. Yet the RAF executives brazenly go on public platforms and [to] Scopa [the standing committee on public accounts] with the very same reports that have not been tested.”

Another RAF insider claimed a manager responsible for the old call centre had attempted to modernise it, but this was shut down by RAF leadership — only for “this same service to be provided by an external party”.

Documents relating to the procurement show significant process irregularities. In February 2023 senior RAF officials, including those in suspended CEO Collins Letsoalo’s office, hastily compiled and approved a memorandum asking the RAF’s bid adjudication committee (BAC) to ratify the process for participating in a department of employment & labour (DEL) contract with Alteram. This was despite the process not originating from the BAC, as required by the fund’s policy.

The request, which included a business case, was compiled and signed off in a 24-hour period by the RAF’s stakeholder relations management (SRM) department.

Crucially the documents show that while this internal process was under way, Letsoalo had already written to the then DEL director-general Thobile Lamati in November and December 2022 for permission to participate in that department’s contract with Alteram. This was done using regulation 16A6.6 of the National Treasury’s regulations, which allows an accounting officer to participate in another department’s competitively bid contract, provided conditions are exactly the same and written approval is granted.

This suggests that a decision to contract Alteram had been taken in 2022, and the February 2023 internal processes were an attempt to create the illusion of a process.

BAC request compiler Tshisikhawe Ndou, a senior manager in the SRM department, explicitly noted that the decision to participate and the initiation of the process should have been led by the BAC.

Further compounding the irregularity, CFO Bernice Potgieter, who was one of the executives who reviewed and approved the business case, later chaired the BAC meeting that ratified the request and approved the price, creating a conflict of interest.

Last month Potgieter, acting CEO Phathu Lukhwareni, acting chief governance officer Mampe Kumalo, and head of office in the CEO’s Mpho Manyasha were placed on precautionary suspension. Although some of the executives played a role in the approval of the participation contract, it is not clear whether the suspensions are related to this.

There was also no paper trail showing how, when and by whom the study that led the RAF to the DEL was done, and this week the RAF said it could not confirm any information about this study, referring the Sunday Times to the suspended executives. The fund could also not confirm whether the contract extension was done in accordance with Treasury guidelines, again referring the Sunday Times to those executives.

The participation in the contract ultimately cost the RAF R15.3m a month, a sharp increase from the R25m a year to run the previous call centre. The RAF also continued to pay employment costs for its old call centre agents, who continued at the old centre.

The RAF’s decision to partner with Alteram has yielded remarkable results, with a substantial increase in claimant engagement. By allowing claimants to interact in their preferred channel and language, the RAF achieved good outcomes, and its claimants enjoyed a superior customer experience

—  Megan Ross, director at Nicqui Galaktiou Incorporated, Alteram’s lawyers

A cost breakdown shows that Alteram charged just over R2m a month for the solution, implementation and support, and a further R8.5m a month for personnel and infrastructure.

Alteram’s lawyers, Nicqui Galaktiou Incorporated, said their client denied that the contract was awarded without a competitive bidding process.

The firm’s director, Megan Ross, said Alteram provides a “strategic service to the RAF”, driving transformative results through its cutting-edge omnichannel technology and multilingual capabilities.

“The RAF’s decision to partner with Alteram has yielded remarkable results, with a substantial increase in claimant engagement,” she said. “By allowing claimants to interact in their preferred channel and language, the RAF achieved good outcomes, and its claimants enjoyed a superior customer experience.”

Ross cited the RAF’s annual report for the financial year ended in 2025, which “confirmed the positive impact” and showed the contact centre had 576,009 interactions and a 99.1% resolution rate. This was an increase from the last year of the old call centre in 2023, which recorded a 95.5% resolution rate.

The Sunday Times also established that RAF has referred this contract to police for criminal investigation.

The RAF, a state-owned entity that provides insurance against injuries or death from motor vehicle accidents and is funded by a levy on petrol and diesel, has been rocked by instability and allegations of malfeasance, maladministration and corruption centring around Letsoalo and his leadership team.

These allegations led to Scopa establishing an ad hoc inquiry into the fund. The inquiry revealed a host of irregularities, including Letsoalo’s insistence that the RAF not be audited using accepted accounting standards. This included allowing the fund to classify a large number of claims as “in transit” rather than immediate liabilities, a deliberate strategy estimated to understate the fund’s liabilities, which are now believed to be more than R500bn.

Several senior RAF executives are presently on suspension pending disciplinary action, including acting CEO Phathutshedzo Lukhwareni, CFO Potgieter, and acting chief governance officer Mampe Kumalo.