R1.4 billion stolen from South African trusts

Legal practitioners have stolen an estimated R1.4 billion from South African trusts, primarily due to trust structure loopholes and insufficient institutional cooperation.

According to the Legal Practitioners Fidelity Fund (LPFF), 561 reported cases of trust fund theft involving lawyers remain unprosecuted. 

Only 59 convictions have been secured in the past seven years, and 25 of those have resulted in jail time.

Speaking to SABC News, the CEO of LPFF, Motlatsi Barnabas Molefe, said that while a small minority of legal practitioners commit these crimes, the damage they cause is significant. 

“These are lawyers who’ve abused the trust of their clients and their privilege,” he said. Molefe believes much of the problem is in the structure of trust account management. 

“Lawyers have considerable autonomy over these accounts, and auditing only happens once a year. When discrepancies are discovered, the funds have often long since vanished.” 

The types of trust funds affected vary, but Molefe highlights conveyancing—the legal transfer of property—as a long-standing concern. 

Claims related to the Road Accident Fund (RAF) have also been a frequent target, with an alarming new trend of theft from medical malpractice settlements. 

These are often large payouts meant to support victims of life-altering events, and when stolen, the impact is devastating. 

“This is money that could have helped them get along, helped them get through whatever they’re dealing with at the moment,” Molefe said.

Despite regulatory safeguards, loopholes continue to be exploited. One persistent issue, Molefe said, is the lack of cooperation between institutions. 

“The gap is always about cooperation,” he explained. For example, the RAF might pay out funds to a legal practitioner without knowing whether those funds were ever passed on to the rightful claimant. 

Without real-time data sharing between institutions, theft often takes months, or even years, before it is discovered.

Problem not taken seriously

To address this, the LPFF recently signed a memorandum of understanding with the Special Investigating Unit (SIU), a move Molefe said would change the tide. 

“We are truly in a position where we are hoping it will make a difference,” he said. The SIU brings stronger investigative powers and speed, allowing quicker freezing of stolen funds and assets. 

Molefe believes this partnership will give the Fund a better chance of recovering stolen money and settling claims more efficiently.

Molefe urged clients to be proactive. “If a matter is taking too long, particularly RAF cases, clients can call the RAF directly and check the status of their payout using their ID number.” 

For other legal matters, Molefe recommended contacting the Legal Practice Council (LPC), which has offices in every province. 

Wayne Duvenage, CEO of the Organisation Undoing Tax Abuse (OUTA), is far less optimistic. He believes the situation points to a systemic failure. 

“The lack of accountability in trust fund theft cases in South Africa is not taken seriously by the National Prosecuting Authority (NPA) or the Legal Practice Council,” Duvenage said.

He added that this neglect undermines public trust in the legal profession. He also criticised the LPC’s internal disciplinary processes, calling them “opaque and weak.” 

Duvenage rejected the common justification that the NPA lacks capacity. “This excuse must end,” he said, insisting that complex financial crimes must be treated with the urgency and seriousness they deserve.

The Democratic Alliance (DA) agreed with Duvenage, noting that it is unacceptable that only 59 cases of trust account theft and fraud have been successfully prosecuted.

“The DA will demand that legal oversight bodies and the NPA account for the lack of prosecutions involving theft of trust money before the Portfolio Committee for Justice and Constitutional Development,” the party said. 

The DA added that the Legal Practice Council (LPC) is specifically mandated by the Legal Practice Act to ensure that public trust in the legal system and its practitioners is protected.

“They have failed dismally in this task, while the public, especially the poor, suffers at the hands of criminals posing as lawyers,” the DA said. 

“Law-abiding legal practitioners pay fees to these oversight bodies, but it is clear that very little oversight is taking place.”