South Africans outraged by exemption granted to Eskom on reporting of irregular expenses

Several South Africans are outraged by the National Treasury’s exemption on the annual reporting of “irregular, fruitless and wasteful expenses” by Eskom, with AfriForum promising to bring a review application against the treasury’s decision, and the DA vowing to “do everything possible to stop this blatant attempt to distort the true financial facts of an entity, rotten to its core”.

The state entity itself unsurprisingly said it “welcomes” the exemption and “assures South Africans of its commitment to complying with applicable legislation”.

Minister of Finance, Enoch Godongwana, announced in the Government Gazette that Eskom will henceforth enjoy this exemption from the Public Financial Management Act and the regulations of the treasury. This exemption will mean that Eskom will not have to report on any irregular and wasteful expenditure for the 2022/23, 2023/24 and 2024/25 financial years, and that there will therefore be no accountability for financial management at Eskom during this period.

AfriForum warns this exemption will “pave the way for further corruption on an extremely large scale at an institution that is already suffering from its consequences, such as the poor maintenance and repair of infrastructure”.

AfriForum said: “We are consulting with our legal team to bring a review application so that this decision of the national treasury is set aside.”

The exemption was at the request of the Eskom Board Chairman, Mpho Makwana. The DA, which is also consulting with its legal team, says Makwana needs to explain why the exemption is necessary and why for three consecutive years?

“There is clearly significant financial irregularity that Eskom wants to hide from investors and South African taxpayers who fund it. Treasury and the Minister must immediately withdraw this exemption,” said Dr Dion George – DA Shadow Minister of Finance.

“It is unacceptable to hide material financial information from auditors in the hope of obtaining a better audit outcome… Hiding information on this problem doesn’t make it go away and certainly does not ensure investment; it only serves to promote corruption.

“The likely reason for this exemption is that Eskom needs more money from investors to fund its operation even if a large portion of its debt is transferred onto the national balance sheet. By hiding material information, the signal to investors Eskom hopes to attract is already negative and they would only invest if there is significant, premium, government guaranteed return.”

Dr George said the decision to grant Eskom this exemption is “tantamount to an admission that corruption within the entity must be accepted as a given, and that solutions to rolling blackouts will come at criminally induced premiums. With the closing balance of irregular expenditure amounting to R67.1 billion on 31 March 2022, as stated in Eskom’s latest annual report, this number will undoubtedly escalate due to decreased oversight.”

Without having to declare irregular and fruitless and wasteful spending, Eskom has no incentive to fight corruption and Treasury gives a free pass to criminal syndicates in Eskom that it knows operates with political coverage, said the DA.

“Just how committed is the Treasury and Government to preventing corruption at Eskom? Are we to accept purchases such as R80,000 knee guards and R200,000 wooden-handled mops, as previously reported, and the billions more?” asked Dr George.

A private petition has been set up on Change.org.

This absolutely HAS to be legally challenged with the utmost urgency! #eskom pic.twitter.com/Vm5DB0gfGl

— Pieter-Louis Myburgh (@PLMyburgh) April 3, 2023

#Eskom_MediaStatement

Eskom welcomes National Treasury’s exemption on the annual reporting of irregular, fruitless and wasteful expenses, and assures South Africans of its commitment to complying with applicable legislation pic.twitter.com/gUfNPGL1y4

— Eskom Hld SOC Ltd (@Eskom_SA) April 3, 2023