It’s time for Trevor Manuel to resign as Old Mutual chair.
As finance minister, Manuel served the country with distinction from April 1996 to May 2009, presiding over the longest, most sustained period of economic growth in South Africa’s history.
GDP over that period went from $294.3 billion to $576.1 billion and interest rates from 10.76% to 3.9%. By the time the 2008 global financial crisis rolled around, South Africa had a budget surplus of 0.9%, compared with the deficit of 4.5% in 1996.
Although the commodity super cycle, boosted by rising demand from China, helped him, he also put in place market-friendly policies and enabled South Africa to not only tap into this demand but sold the country as a place to do business.
Back then, many of the money people were suspicious as to whether this former quantity surveyor was up to the job of finance minister.
His relationship with them didn’t start well. When markets fell on the news of his appointment, he glibly said: “I insist on the right to govern … I insist on the right not to be stampeded into a panic decision by some amorphous entity … called the market.”
This sent the rand tumbling.
Eventually he and the markets had a meeting of the minds.
The same cannot be said of him and Old Mutual CEO Peter Moyo.
Since mid-June, Old Mutual’s board, under Manuel’s guidance, has been trying to fire Moyo – something Moyo has successfully averted in the courts (for now).
The legal jostling has frustrated Manuel.
His lambasting of the court rulings drew criticism when, referring to Gauteng High Court Judge Brian Mashile, he said: “If you take a board imbued with the responsibility and accountability and you get that overturned by a single individual who happens to wear a robe, I think you have a bit of a difficulty.”
It was seen to undermine the independence of the judiciary. He later made an unreserved apology, saying: “It was never my intention to show disrespect to the learned judge or his judgment.”
He also said: “I accept that my language was wholly inappropriate to express my disagreement with the decision and sincerely regret the manner in which I did so.”
Even so, the damage to the Old Mutual brand over the last few months has been stark.
Besides the court rulings against it, nothing says the board has lost control like Moyo trying to get back into his office, coffee in hand, by awkwardly trying to squeeze past a security guard.
Manuel can argue that he’s just doing his duty as a board member by ensuring that Old Mutual is properly led, and that this allows him and the board to dismiss and appoint a CEO of their choosing.
He may think himself unlucky to be on the wrong side of several court judgments when it comes to executing this duty. He may even be right. But the way things are unfolding this doesn’t matter.
He must leave because the fight between him and Moyo has become personal.
When disputes between two of the most powerful people in a large organisation become this fraught, how can either of them say that the interests of stakeholders come first?
How does the lot of Old Mutual’s 30 000 staff, or its 1.9 million customers, or those who hold its 4.83 billion shares benefit from this fight? Has anyone benefitted from the 9% slump in the share price since the crisis began?
It’s clear that at some stage Moyo will exit. What also needs to happen is for the rest of the board members to reconsider their involvement with the company, as Nombulelo ‘Pinky’ Moholi has done. She resigned with immediate effect last Thursday.
The board owes this to the group’s staff, customers and shareholders. There is nothing amorphous about the very real dangers this fight presents to them.
Leadership needs to be shown.
Not the kind of ‘Ra ra, we will fight them on the beaches’ kind of stuff.
Rather the kind that is never heralded and always underappreciated.
The kind where you know you are right but still have to do the right thing, even though it hurts.