'It would not survive constitutional scrutiny': Madonsela welcomes Eskom exemption U-turn

Former public protector Thuli Madonsela has welcomed finance minister Enoch Godongwana's decision to withdraw Eskom's exemption from disclosing irregular, fruitless and wasteful expenditure.

Godongwana made a U-turn on the exemption after a public backlash. He said this is to allow for a period of further engagement and written technical input from all relevant stakeholders on the matter.

Madonsela said the exemption would have not survived constitutional scrutiny.

“Good move minister of finance,” she said. “When asked about the Eskom audit exemption during my lecture on teaching integrity in the public service, I opined that this would not survive constitutional scrutiny nor solve the problem meant to be solved.”

Madonsela said the initial mistake underscores the importance of embracing constitutional governance.

“The student who asked wanted to know if this would not open the floodgates of municipalities asking for the same partial exemption for the same reasons. The initial mistake underscores the importance of embracing constitutional governance in all government decisions and actions.

“I had opened the integrity lecture by asking if the announcement of the Eskom exemption had not riled the course participants and the entire class responded affirmatively,” she said.

Godongwana said the intention of the exemption was “to allow Eskom to have better financial statements, and at the same time create an environment where there remains transparency on corruption, and irregular expenditure, as well as all the other related issues”.

“It was never the intention of the exemption to hide anything in this regard,” he added.

He said the exemption would still have required Eskom to disclose all irregular and fruitless expenditure in its annual report, and would have been subject to audit. This audit, however, would be separate from the financial statements, so the financial statements of Eskom would be more aligned with how listed companies generally report.

He said it also would not have exempted Eskom from taking appropriate steps to prevent irregular and fruitless and wasteful expenditure, including appropriate criminal or disciplinary steps because of any losses incurred to date.

“However, following further engagement with the office of the auditor-general, and in light of adverse comments by a range of stakeholders, we have decided to withdraw the exemption for now, to allow us to take all of these comments into account, and for us to consult with the auditor-general and Eskom’s auditor, Deloitte so that the final framing of the exemption is subjected to the proper cheques and balances, and that the measures mitigating against corruption are tightened,” he said.

Godongwana said while the outcry and some of the misunderstanding of the practical and technical implications of the exemption were regretful, the interest shown in the matter by some citizens was evidence of the “deep interest by South Africans in the democratic process”.

“We welcome the comments by honourable members as well comments on the technical aspects of the exemption that relate to the applicable accounting principles.”

The period for written technical comments will begin on April 11 and run until April 21.

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