Full disclosure is essential for rebuilding public trust

OUTA has commended the decision by Minister of Finance Enoch Godongwana 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.

“Government’s about-turn on this shows an awareness of public anger over the attempts to exempt Eskom and the value of consulting the public,” says Wayne Duvenage, OUTA CEO.

“We hope the Minister will find a more transparent and effective mechanism for state-owned entities to address the problem of historical misspending.”

On 31 March 2023, Minister Godongwana granted Eskom the partial exemption from sections of the Public Finance Management Act and a Treasury regulation, allowing it to omit the information from its annual financial statements. The information was still required in the annual report. The Treasury said the exemption was needed as including such information in the annual financial statements meant Eskom ran the risk of a qualified audit opinion and consequent increased costs of borrowing.

There was a public outcry when the exemption became public. OUTA was among those who questioned the exemption (see here). “Exempting Eskom from complying with certain sections of the PFMA sends a clear message that government is not serious about transparency and accountability when it comes to Eskom’s financial management practices,” said Duvenage at the time.

The Minister then withdrew the exemption and issued a request for public comment on the proposal that an exemption be made.

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, government in this instance is continuing to feed the problem,” said OUTA’s submission. See here.

The Treasury said comments were received from 56 individuals and organisations on the proposed exemption and the Minister decided against the exemption.