Durban – The Organisation Undoing Tax Abuse has welcomed Finance Minister Enoch Godongwana’s decision that Eskom will not be granted a partial exemption from having to disclose irregular, fruitless and wasteful expenditure, and material losses from criminal conduct in its annual financial statements.
The decision was announced by the National Treasury.
There was a public outcry after Godongwana issued a letter to Eskom’s board chairperson on March 31 granting exemptions from Section 55(2)(b) of the Public Finance Management Act (PFMA), Treasury Regulations 28.2.1, and National Treasury Instruction No 4 of 2022/2023.
This was in response to a request for exemption from Eskom.
This essentially meant the power utility’s annual financial statements would not disclose material losses because of criminal conduct, irregular and fruitless, and wasteful expenditures that occurred during the financial year and criminal or disciplinary steps taken as a result of these.
The decision to review the exemption was taken after a meeting with Auditor-General Tsakani Maluleke.
This week Godongwana said the Eskom board needs to do more operationally to reduce the scope of fraud and corruption before such an exemption can be considered and for it to be effective.
He said it is critical for the country that state-owned entities such as Eskom are not dependent on fiscal allocations and guarantees for their capital and operational funding requirements.
Godogwana said Treasury recognises the need to support and strengthen Eskom and other SOEs in reversing the effects of state capture.
OUTA CEO Wayne Duvenage said the government’s about-turn on the issue shows an awareness of public anger over the attempts to exempt Eskom and the value of consulting the public.
“We hope the minister will find a more transparent and effective mechanism for state-owned entities to address the problem of historical misspending,” Duvenage said.
“There was a public outcry when the exemption became public. OUTA was among those who questioned the exemption.
“OUTA submitted comment to the Treasury to object to the exemption; raising concern over Eskom’s history of corruption; and saying such a move could create an environment encouraging even more money to go missing.
“Instead of addressing the root causes that create the prime environment for irregular, fruitless and wasteful expenditure to multiply, the government in this instance is continuing to feed the problem,” said Duvenage.
DA MP Dion George said the withdrawal of the PFMA exemption is but the first step.
“The government must also demonstrate authentic commitment to curbing corruption and maladministration, rather than disguising insufficient attempts as genuine action. This will require competent political will, strong governance, and decisive decision-making,” he said.
THE MERCURY
