Eskom's Financial Disclosure Raises Governance Concerns

The most reliable warning sign in a company’s accounts is seldom a wrong number. It is a judgement that cannot be tested from the outside – where the statements disclose what management concluded, but not the contemporaneous evidence that would show whether that conclusion was reasonable when reached. That is a failure of disclosure, not arithmetic, and in a quarter-century of forensic work, it is the point at which fraud, if it exists, stops being independently checkable. Read: Economic crime: The arithmetic of consequence Eskom’s decade is a case of exactly that. Eskom has reported a R30.3 billion profit, and called it operational recovery, energy security and financial sustainability. The figure is reported in audited financial statements, although the 2026 audit opinion was qualified over irregular-expenditure disclosure. I do not dispute the R30.3 billion figure. But a single year is the wrong lens. Across the decade, the material discretionary choices examined here repeatedly fall in the direction that flatters the result. That does not make the reported position false. It means the boundary between what the accounts assert and what an outsider can independently establish has widened. Accounting standards leave room for management judgement in recurring places: what to recognise as an asset, what to impair, what to value by estimate and what future assumptions to use. Judgement becomes significant when it repeatedly favours the reported result and later evidence – a derecognition, restatement, collectability write-down, counterparty figure or audit finding – tests or contradicts it. None of what follows alleges fraud. Each accounting treatment may have a defensible explanation. The forensic question is whether the contemporaneous evidence supporting those judgements can be reconstructed. The tax asset that disappeared two years before the profit A deferred tax asset represents future tax benefits that can be used against taxable profits. It is recognised only when sufficient future taxable profit is expected to be available. In 2024, Eskom derecognised R36.6 billion in deferred tax assets after concluding that it would not generate sufficient taxable income to use R135.7 billion in accumulated tax losses. The adjustment contributed R29.5 billion to the tax charge, turning a R25.5 billion loss before tax into a R55 billion loss after tax. Eskom attributed the adjustment to the separation of the transmission business into the National Transmission Company of South Africa (NTCSA). After the transfer, it no longer expected sufficient taxable profit against which the losses could be used. The issue is not that the write-off was impermissible, but whether the forecasts supporting recognition before the write-off were reasonable and adequately supported at the time. The timing matters: a R36.6 billion tax asset disappeared two years before Eskom declared a R30.3 billion profit and financial sustainability. The bad-debt charge that shrank as the profit appeared The same question arises with expected credit losses. In 2025, Eskom recorded a R7.3 billion impairment charge on financial assets. In 2026, that fell to R281 million, even as gross municipal arrears rose by R17 billion to R111.6 billion. That does not mean the accounting is wrong. Expected credit loss rests on probability of default, loss given default, recovery and forward-looking assumptions – precisely the judgements that require testing. The forensic question is therefore not “arrears rose, so the provision should have risen”. It is: What changed in Eskom’s recovery, default and loss assumptions sufficiently to move the impairment charge from R7.3 billion to R281 million while municipal arrears reached R111.6 billion? Valuations, finance costs and figures revisited Roughly two-thirds of the R17.5 billion improvement in profit before tax came from below-operating movements. A R9.3 billion favourable swing occurred in the net fair-value, foreign-exchange and deferred-i