Legal threats fly over move to allow Eskom to hide irregular and wasteful spending
Business group Sakeliga has threatened legal action against a move by National Treasury to exempt power utility Eskom from disclosing irregular and wasteful expenditures.
Treasury on Friday (31 March) gazetted the exemption, which it said is being done in line with section 92 of the Public Finance Management Act.
Section 92 allows the minister, by notice in the national Government Gazette, to exempt any institution to which the Act applies, or any category of those institutions, from any specific provisions of the Act for a period determined in the notice.
The section does not require the minister to provide reasons for this.
The specific section Eskom is exempted from is section 55(2)(b)(i) of the Act and Treasury Regulation 28.2.1 made in terms of section 76 of the Act.
This relates to the disclosure of any irregular expenditure and fruitless and wasteful expenditures that occurred during the financial years in the annual report
Eskom is exempted from this section for the 2022/23 and 2023/24 financial years.
The move has already set alarm bells ringing, given Eskom’s history of procurement fraud, contract issues and a long list of fruitless, wasteful and irregular expenditures. Questions have been raised why the government would want to keep these figures hidden.
In its most recent financial statements, the group recorded over R11 billion in irregular expenditure and over R2 billion in wasteful and fruitless expenditure.
Sakeliga said that there is no clear justification for exempting Eskom from these reporting provisions, which it said enables the public to properly evaluate its financial situation.
“In the interest of public transparency, Sakeliga will be in court against the Auditor-General later this month. In our case, we insist that they disclose their management reports, which include advanced information on wastage, corruption, and other irregularities in all state entities, to Sakeliga and the public,” it said.
“Sakeliga opposes the latest step taken by the Minister of Finance in the same spirit, as it is unconscionable that information about Eskom is to be withheld from the Auditor-General and/or the public.”
According to Eskom, the amounts related to irregular, fruitless, and wasteful expenditures still have to be published in Eskom’s integrated reports. However, these reports are only published once a year.
Treasury has yet to publish details on the measure but told News24 it would do so in due course.
“Sakeliga’s attorneys are currently drafting a letter to the Minister of Finance. In the letter, Sakeliga insists that this regulation be withdrawn immediately, otherwise, Sakeliga will be compelled to approach the court on an urgent basis.”
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