PHUTI MOSOMANE
THE Congress of South African Trade Unions (COSATU) spokesperson Sizwe Pamla said the Federation welcomed Finance Minister Enoch Godongwana’s withdrawal of the ill-conceived proposal to exempt Eskom from reporting on irregular, fruitless, and wasteful expenditure.
The Treasury’s earlier decision – which was met with widespread condemnation – would have allowed Eskom not to report irregular and wasteful expenditure for the next three financial years in its Annual Financial Statements.
The Federation said It appreciates that the government listened to and conceded to the workers and the public’s outcry against its dubious and contentious decisions.
This change of heart should also be extended to Transnet which received the same exemption in March 2022, Cosatu said.
The Minister of Finance has determined that Eskom not be granted a partial exemption from section 55(2)(b)(i) of the Public Finance Management Act (PFMA), (Act No. 1 of 1999 – the Act) and Treasury Regulation 28.2.1, from disclosing irregular, fruitless and wasteful expenditure and material losses from criminal conduct in its annual financial statements.
Godongwana said he recognised the commitment of the Eskom board and management to fight and expose fraud and corruption and the additional compliance and reporting burden facing Eskom and other State-Owned Entities (SOEs).
However, he said Eskom needs to do more operationally to reduce the scope of fraud and corruption before such exemption can be considered, and for it to be effective.
“As Eskom attempts to recover from the devastating impact of State Capture, and take steps against past and current corruption, it needs to ensure that its anti-corruption strategy is credible and has the support of key stakeholders like investors, lenders, suppliers, customers, and the public,” said Godongwana.
Cosatu’s Pamla said the “obscurantist arguments proffered” by the government for the exemption of SOEs including Eskom were unsatisfactory.
“They were an unnecessary distraction and reinforced the perception that decision-makers in this country view accountability as a nuisance to be managed away.
“The country’s self-deception is one of the reasons we are in trouble. We prefer to deflect than face up to the realities of the situation. We will much rather lie to ourselves or be lied to than deal with the truth,” Pamla said.
The government needs to intensify and strengthen the financial regulatory framework and governance systems, including implementing the Zondo Commission’s recommendations, he said, adding that Cosatu welcomed the Treasury’s call for a constructive engagement on what support is needed for our State-Owned Enterprises.
“However, this cannot come at the expense of state companies failing to account for how they spend the workers’ hard-earned taxes. The fight against corruption, State Capture, and malfeasance needs to be elevated and not weakened. This includes tightening the Auditing Profession Act as Cosatu has repeatedly called for”.
The National Treasury said It has since engaged with the Auditor-General and considered all public comments received through Government Gazette General Notice of 6 April 2023 which withdrew the Government Gazette General Notice No. 3247 of 31 March 2023 and invited public comments on a proposed exemption for Eskom.
In total, fifty-six (56) comments were received, with twenty-three (23) comments received in formal correspondence and thirty-three (33) comments received through emails, covering a broad spectrum of accounting and reporting, auditing, governance, legal principles, and public interest issues have been duly considered.
The National Treasury also engaged with audit firms, professional auditing and accounting bodies, a rating agency, and other relevant authorities to discuss the challenges and seemingly onerous compliance reporting requirements applicable to State-Owned Entities such as Eskom.
Although irregular expenditure does not automatically equate to fraud and corruption, many comments submitted view irregular expenditure as an indicator of how SOEs are managing their finances.
Accounting and auditing experts noted that SOEs are currently subject to more onerous accounting and reporting standards than commercial companies, as they are required to comply with both the PFMA and the Companies Act, as well as the International Financial Reporting Standards (IFRS) and JSE Debt Listing Requirements.
In addition, as part of the Eskom debt relief arrangement, Godongwana said he has instituted additional reporting obligations on Eskom, which the entity will be required to submit to Parliament and oversight structures.
Cosatu said the Treasury needs to move with speed to table the Public Procurement Bill in Parliament which will help plug the many holes in public finances and procurement across the state.
The Bill needs to reach Parliament by 1 July if we are to ensure that it might still be passed into law before the end of the 6th administration, said Cosatu.
INSIDE POLITICS
