Ministerial ‘gag order’ at Eskom

THE SA Local Government Association (Salga) in KZN says it is dismayed at the exemption given to Eskom in disclosing material losses.

The exemption was given to Eskom by the minister of electricity, and partially withdrawn last Wednesday.

The exemption from Section 55(2) (b) of the Public Finance Management Act

(PFMA), Treasury Regulations 28.2.1, and National Treasury instruction No. 4 of 2022/23 effectively meant Eskom’s annual financial statements would not disclose material losses because of:

• Criminal conduct, irregular and fruitless, and wasteful expenditure that occurred during the aforementioned financial year

• Criminal or disciplinary steps taken because of such losses or irregular expenditure, fruitless and wasteful expenditure.

Speaking to Eyethu Bay Watch about the latest developments by Treasury to ‘temporarily withdraw’ the exemption, KZN Salga Chairperson Thami Ntuli said the exemption was a gag order against staff members who want to disclose wrongdoing or wasteful conduct.

“The annual financial statements are the only time employees and executives can communicate with the shareholder in a structured manner. South Africans must wonder if such an opportunity still exists and if such exemptions can be made without public scrutiny,” said Ntuli.

He said the powers to give financial exemptions free of civilian oversight was questionable and ought to be publicly scrutinised. “Ministers are ultimately politicians, and the executive is accountable to Parliament. However, the ability of a minister to regulate for exemptions and then to grant exemptions without Parliamentary oversight appears to circumvent principles of checks and balances," he said.

“Exemptions are commonly used by government entities and municipalities, not to escape disclosure but to legally obtain exemptions on deadlines which are often imposed by national Treasury and the Auditor-General (AG). This exemption for Eskom is not simply a matter of relaxation of a compliance item,” argued Ntuli.

He further said that if this exemption was a thing to go by, it would mean the public may never learn of Eskom’s financial state.

“Salga is concerned about using constitutional powers entrusted to national Treasury to promote non-compliance and lack of transparency seemingly and quite brazenly. We proposed that, for financial disclosure exemptions, the concurrence from Parliament be mandatory,” said Ntuli.

The Eskom exemption is not a matter of relaxation of a compliance item