“Withdraw it completely, in its entirety and forever.”
This was MPs’ message to finance minister Enoch Godongwana and the National Treasury as they demanded a permanent withdrawal of the Eskom exemption from including irregular expenditure and fruitless and wasteful expenditure in its financial statements.
Five parliamentary committees — public accounts, finance, standing committee on the auditor-general, appropriations and the portfolio committee on public enterprises held an urgent joint-meeting to get clarity from Godongwana on what informed the decision to give the utility the Public Finance Management Act exemptions.
MPs from across the political party spectrum lashed out at the initial decision by the Treasury saying it was causing more damage to SA’s reputation and worsening an already dire situation at the utility.
They called for compliance with the law and for the National Treasury not to aid and abet through “legislative gymnastics” the corruption that may be taking place at Eskom.
Even ANC MPs who tend to be soft on cabinet ministers came out swinging at Godongwana and the National Treasury. “We welcome that sanity has prevailed and the minister has considered withdrawing the exemption,” said ANC MP Bheki Hadebe.
“I wanted to say initially that it was our considered view that the request [by Eskom] and the subsequent decision for exemption was irrational and unjustifiable in the current state of Eskom.”
Hadebe said for a company that has obtained qualified audit opinions for the past five financial years, mainly on irregular expenditure, Eskom should be preoccupied with putting measures in place to deal with inadequate systems control and be able to timeously detect and record all irregular expenditure, not hide them.
He noted that the irregular expenditure had increased from R8m in 2017/18 to R4.9bn in the last audit.
“They must be preoccupied with ensuring that the full extent of irregular expenditure is disclosed.
“We are sitting with an entity that wants now to remove this from the annual financial statement, yet they are unable to disclose everything,” he said.
Hadebe said the exemption suggested that “we are hell-bent to hide and protect those that are corrupt and people would be justified to arrive at that conclusion”.
Nothing has changed at Eskom and clearly nothing will change and so the cop out is to say exempt us because we are unable to deal with irregular expenditure.
— IFP’s Mkhuleko Hlengwa
The DA’s Dion George was among those who said the attempt to exempt Eskom — or an amateur attempt to fiddle with the system to get finance, as he described it, has damaged SA’s reputation even more than before.
George, who was planning to take legal action against the Treasury’s decision warned Godongwana that if the exemption is reintroduced, he will go to court.
The EFF’s Ntombovuyo Mente reiterated similar sentiments, saying concealment was a criminal offence.
Mente warned that the route the Treasury had taken was not just dangerous, but it would potentially create a precedent for dysfunctional municipalities and other SOEs and this could cripple the state.
“Once you set an example and you build a case in trying to conceal expenditure, any other person can use that and if you go to court after denying the other entities to use the same process, you will not win when you have a successful case study which has been allowed to roll out,” she said.
She also poured water on the argument that Eskom would publish the concealed financial information on its annual report, saying this was not proper because an annual report published what the department wants a reader to see, while annual financial statements and the audit report were signed by the AG.
The IFP’s Mkhuleko Hlengwa repeated Hadebe’s points on Eskom’s qualified audit opinion of the past five years on areas of irregular expenditure, saying it would be wholly reckless, dangerous and irresponsible to condone its lack of a functional and credible audit action plan through an exemption.
“The company needs the tightening of legislative compliance, particularly because Eskom has not formulated a credible, functional and sustainable audit action plan in response to those audit outcomes and to deal with other areas of material concern,” said Hlengwa.
“Now, to sanitise the books of Eskom, you come with a manipulation of the law on a key area which has been consistent and persistent for the past five financial years as contained in the audit outcomes.
“Nothing has changed at Eskom and clearly nothing will change and so the copout is to say exempt us because we are unable to deal with irregular expenditure.”
Another IFP MP Narend Singh said the exemption was not just about Eskom but would affect the Treasury and the entire government’s credibility.
“I believe what has happened will have an opposite effect, instead of strengthening Eskom to get funding, all lenders will look at South Africa and the financial statements produced here with a microscope.”
He said the country was lucky that the office of the AG still had “lots of credibility” and was recognised internationally and that it would keep an eye on things and ensure good governance and financial management.
A Treasury official said exemption would not be granted on any irregular, fruitless and wasteful expenditure emanating from criminal activities.
“We still want to see consequence management being reported in the annual financial statements.
“What we exempted Eskom from is to disclose in their annual report irregular, fruitless and wasteful expenditure that is not attached to any criminal activity or that is not attached to any form of losses,” said the official.
Godongwana said a new government gazette withdrawing the old one will be published on Thursday (tomorrow).
He said a solution has to be found before the end of May, the deadline for Eskom to submit its financial statements.
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