Treasury's stealth bailout strategy exposed in Instruction Note 4
10 August 2023
The DA takes note of and is deeply concerned by the Financial Mail's revelation that Treasury has issued Instruction Note 4 2022/23 - a sweeping exemption that absolves all State-Owned Enterprises (SOEs) from reporting irregular, fruitless, and wasteful expenditure.
The PFMA rules, which require SOEs to report any material losses through criminal conduct and any irregular expenditure, have been conveniently blamed by struggling SOEs for their failures.
Instruction Note 4, which extends to all SOEs and provincial treasuries, now represents a dramatic overhaul in accounting for such irregular expenditure and allows it to go unaudited.
This means that the stain of past misconduct can be entirely erased, and the board of the SOE can "condone" or pardon previous contraventions of the Public Finance Management Act (PFMA). This effectively hides irregular expenditure from the public eye and allows management to escape accountability for past misconduct. This alarming development follows a similar exemption granted to Eskom (now overturned), which also allowed the entity to conceal such expenditure in its accounts.