Treasury rejects Eskom’s exemption application


The Organisation Undoing Tax Abuse (Outa) has welcomed finance minister Enoch Godongwana’s decision not to grant a partial exemption from having to disclose irregular, fruitless, wasteful expenditures and material losses from criminal conduct in its annual financial statements.

This after yesterday’s announcement by 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.

Duvenage said the organisation hoped Godongwana would find “a more transparent and effective mechanism for state-owned entities to address the problem of historical misspending.”

In April Godongwana granted Eskom 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. Treasury said at the time that the exemption was needed because including such information in the annual financial statements meant Eskom ran the risk of a qualified audit opinion and consequent increased borrowing costs.

There was a public outcry when the exemption became public, and Outa was among those that lambasted the exemption.

“Exempting Eskom from complying with certain sections of the PFMA sends a clear message that the government is not serious about transparency and accountability regarding Eskom’s financial management practices,” Duvenage said at the time.

Godongwana then withdrew the exemption and requested public comment on the proposal that an exemption be made.

Outa submitted a comment to the Treasury to object to the exemption, raising concern over Eskom’s history of corruption and warning that the 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,” Outa said in its submission.

Treasury said in a statement that it had received comments from 56 individuals and organisations on the proposed exemption, and Godongwana had decided against granting the exemption.

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