Government's PR optics control unravels as two key decisions reversed in a day

6 Apr 2023

Failure to grasp political sensitivities around the corruption and financial malfeasance-wracked Eskom being exempted from reporting irregular spending and criminal conduct losses shows the government’s lack of capacity, inability to communicate and floundering strategic leadership. Ditto, on the electricity State of Disaster flip-flop.

All that’s being withdrawn is the current version of the Eskom exemption from reporting irregular, wasteful and fruitless expenditure and losses from criminal conduct in its audited financial statement. A new exemption will be reissued, after further consultations.

“Yes, I am confirming the withdrawal. By [Thursday] we’ll have a Gazette withdrawing the current one. That I can confirm. The other confirmation is that we definitely will come back,” Finance Minister Enoch Godongwana on Wednesday told four finance-related parliamentary committees — but only after opposition MPs pressed for details of the so-called withdrawal.

This underscores the trend of fudgy government communication — seemingly hedged on factional winds of the governing ANC and political optics — abetted by ANC MPs. Routinely, ANC study groups are called for ministers, and sometimes also officials, to brief governing party legislators and to coordinate questions and approaches. This would definitely have happened on a matter that caused such public outcry as Eskom’s reporting exemption; the finance minister, and perhaps others, would have briefed MPs.

During Wednesday’s parliamentary committee session, ANC MP Thandi Tobias-Pokolo invoked Eskom’s status as a National Key Point, also directing the extent of information shared. Later, ANC MP Xolisile Qayiso interjected to call for an end to opposition questions on what the minister actually meant, saying the exemption was withdrawn “for now”.

And ultimately, the Standing Committee on Finance chairperson and ANC MP, Joe Maswanganyi, closed the meeting, saying the minister had decided to withdraw the exemption — and that’s it.

“We are not going to qualify it by saying for now or for when... If ever there will be further engagement in the future, we will deal with that when we come to that,” said Maswanganyi.

To Godongwana’s credit, he did clarify what he meant — signalling an updated, refined version was in the making after consultations with Auditor-General Tsakani Maluleke, who had raised concerns in what the finance minister described as “intense discussions” on Tuesday.

Possibly consultations could also include Cosatu, the ANC alliance partner which had issued a scathing statement on how the National Treasury’s exemption was a new round of State Capture.

“This is an abominable decision devoid of any common sense, good governance or legal rationale. The federation rejects it with the utter contempt it deserves and demands its immediate cancellation,” the Cosatu statement said.

Key indicators of financial health

Irregular, wasteful and fruitless expenditure and losses due to criminal conduct, while not technically accounting tools, are part of institutional reporting under the Public Finance Management Act (PFMA). And these categories, considered by the AG, are key indicators of an institution’s financial health — and crucially an institution’s capacity to follow legislative and regulatory prescripts.

Shifting irregular, fruitless and criminal conduct losses from the financial statements that are independently audited to the annual report, effectively an entity’s PR statement about itself, is problematic. No independent oversight happens, like an audit or checks against PFMA, and details of misspending and steps to correct such are fudged.

Read more in Daily Maverick: Our Lady of Perpetual Exemption: Eskom’s latest saga alarms already bruised South Africa

It was the point repeatedly made by opposition MPs, given Eskom’s track record of delayed annual report submission to Parliament, and qualified audit opinions since 2017, largely on the back of irregular expenditure and other (mis)spending.

And to Godongwana’s credit, he did accept that the timing and communication of this now-withdrawn Eskom reporting had been lacking, similar to the brouhaha that erupted over the changed procurement regulations.

“With hindsight, we should have said it is likely to happen, be preemptive in the communications. Even in this particular matter, we should have been pre-emptive in the consultative process... We are learning.”

Too slowly; it’s come at a significant reputational cost to the National Treasury, Eskom and the government at large.

The Eskom exemption debacle has highlighted how the government is out of touch and in a bubble. Steeped in that kowtowing culture of “Yes, minister, three bags full, minister”, governance lacks capacity and strategic leadership. Instead, the focus falls on controlling the optics — the Presidency is leading on that front, even if it damages constitutional institutions like Parliament and the Auditor-General.

But governance by PR events and making things look pretty is at best short-lived, at worst nonsense. The Eskom exemption, or balance sheet sanitising as opposition MPs on Wednesday called it, got bust by widespread sharp public criticism.

End of State of Disaster

Litigation against the electricity State of Disaster by Outa (Organisation Undoing Tax Abuse) that the government sussed it would lose, finally led to the disaster declaration’s end.

As far back as mid-2022, the government and the Presidency were told in a legal opinion that this electricity State of Disaster would not carry. And when the government’s considerations of this emerged publicly, a host of legal scholars, analysts and others told the government South Africa had already in place all the necessary legislative and regulatory measures.

Instead, the electricity State of Disaster became the big presidential announcement, alongside a new electricity minister in the Presidency in February’s State of the Nation Address.

It was a quick fix taken with a twist of nostalgia for the Covid-19 State of Disaster in terms of which Cabinet gave itself immense powers — also to ban sales of open-toe shoes and grilled chicken — through regulations that do not come under parliamentary scrutiny and with bringing spooks, cops and soldiers into the centre of state decision-making through NatJoints (National Joint Operational and Intelligence Structure) — an entity that does not account publicly and is not established in law or regulation.

Read more in Daily Maverick: We’ve got the power: Government hangs on State of Disaster to keep control

That an electricity State of Disaster was unnecessary, emerged already in March. Crucially, Godongwana made the Eskom reporting exemption under the Public Finance Management Act (PFMA), not the disaster regulations that were also eschewed by Environment Minister Barbara Creecy who used existing legislation to dismiss an appeal by Karpowership, which remains embroiled in litigation over emergency power provision.

That the ending of the electricity State of Disaster was not communicated by the government, but Outa, shows the government’s inability to properly, proactively and effectively communicate.

Outa released the State Law Adviser’s letter: “We are instructed that the Minister of Co-operative Governance and Traditional Affairs, in consultation with the relevant Cabinet members, has decided to terminate the state of disaster…”

The government’s televised briefing, styled as an “update” on the State of Disaster, had been scheduled a day earlier, and at the allotted time on Wednesday, two ministers and a deputy took to the speaker’s podium.

They held the line of the statement issued after Outa’s statement and the briefing — a review found no need for extraordinary powers. It was only in question time that some sort of answers were given on the litigation.

“On the basis of that review you don’t need extraordinary measures,” said Deputy Cooperative Governance Minister Parks Tau. “Of course, we looked at litigation. You ask yourself, if you don’t need a State of Disaster, do we need to be in court? If you don’t need the State of Disaster, you don’t then go and brief senior counsel...

“On the basis of the current review, we do not need them [State of Disaster powers], so we don’t need to be in court. The point of the court becomes moot.”

The ministers got their broadcast time just as the MPs and National Treasury did earlier — important ahead of the 2024 elections — but answers on both fronts remained fudgy at best.

While the debacle around Eskom’s irregular spending reporting exemption and the end of the electricity State of Disaster were front and centre on Wednesday, other shambles include the SABC board non-appointment. Here again, litigation has lifted the lid on governance shenanigans tantamount to political interference just seven years after a hard-hitting parliamentary inquiry into the SABC drew the line in the sand on such.

Strategic leadership, according to Henry Kissinger, the ex-US secretary of state and 1973 Nobel Peace Prize recipient, is necessary because without it “institutions drift, and nations court growing irrelevance, and, ultimately, disaster”.

In his book Leadership, Kissinger writes, “For strategies to inspire the society, leaders must serve as educators — communicating objectives, assuaging doubts and rallying support…”

A televised ministerial briefing, legislators’ concocted categorisation of a temporary withdrawal as the end of it, and the attitude of “minister — or President — knows best” is not delivering such capacity, communication and leadership.

This one Wednesday in April, the government was shown up as simply galumphing along. DM

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Key indicators of financial health

End of State of Disaster