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Is Manuel truly independent?

Old Mutual silent on whether his appointment as chair contravenes insurance regulations.
Old Mutual chair Trevor Manuel. It is unclear whether he underwent an independence test. Image: Moneyweb

Is former Finance Minister Trevor Manuel ‘independent’ enough to be Old Mutual’s chairman?

This question stems from how Old Mutual, without explanation, changed his designation from a non-executive – which he was from 2015 to 2017 – to that of independent non-executive in 2018. This move, along with a strict interpretation of insurance governance regulations for what constitutes independence, suggests that he is not.

The issue of directorial independence and conflicts of interests are thorny ones for Old Mutual, Manuel and its board. They have accused former Old Mutual CEO Peter Moyo of using his holding in NMT Capital, in which Old Mutual also has a 20% stake, to push through a dividend payment that personally benefitted him, at the expense of Old Mutual.

and: Moyo launches R20m damages claim against individual Old Mutual directors

Moyo has denied all wrongdoing and has initiated proceedings to have Manuel and the board declared delinquent directors. He says he was fired after he accused Manuel of being conflicted.

Read: The man disrobed – a window into the ANC elite?

The cloud around Manuel’s ability to act independently comes from his association with the Rothschild Group, which was one of Old Mutual’s advisors when it went through the unbundling of Old Mutual Emerging Markets (OMEM), UK-based Quilter plc (previously Old Mutual Wealth) and Nedbank.

Once-off R1.9bn advisory bill

It is unclear how much business Rothschild does with the insurer, but Old Mutual’s 2017 annual report said the once-off advisory costs associated with its unbundling amounted to at least £100 million or R1.89 billion in today’s currency.

Manuel became a member of the international advisory board of the Rothschild Group and deputy chair of Rothschild South Africa in October 2014, just after he left government. 

For his part, Manuel said he recused himself from all meetings and decisions at Rothschild relating to Old Mutual.

Even so, being involved with both Old Mutual and Rothschild seemingly contravenes Prudential Authority regulations that came into effect last year, which state that only independent non-executive directors can be made chairperson.

Independence criteria

According to the Prudential Standard GOI 2 (Governance and Operational Standards For Insurers), one of the criteria for an independent director is that this person may not: “have any business or other relationship (contractual or statutory), which could be seen by an objective outsider to interfere materially with the individual’s capacity to act in an independent manner”.

The murkiness of the issue has been compounded by Old Mutual shifting Manuel’s description from non-executive to independent non-executive.

When he joined in January 2016, he was titled a non-executive director, and his relationship with the Rothschild Group was inferred to be that of a related party in subsequent annual reports. But in the 2018 annual report, his title somehow changed, without explanation, to that of independent non-executive director.

Old Mutual stays silent 

Despite numerous requests, Old Mutual has yet to clarify how Manuel’s designation changed or if the board considers him independent enough to continue as chairperson.

Having independent directors is essential for sound corporate governance, because they ensure that a person or group does not have unfettered power on the board, according to the King IV governance codes.

They are there to protect minority investors and to provide an outside view to the company.

According to King IV: “A person is independent who, in reality, and appearance, has no interests or position in, or association or relationship with, the company which in the opinion of a reasonable and informed third party would affect that person’s objectivity and impartiality.”

Or, as Dr Andy Schmulow, senior advisor at management consultant firm DB & Associates, puts it: “It is important to have independent directors whose advice is least likely to be tainted by conflicts of interest.”

Schmulow was also an advisor to National Treasury on the drawing up of the Financial Sector Regulation Act.

Independent or not?

For its part, the Prudential Authority, which is housed in the South African Reserve Bank (Sarb), is coy about whether it considers Manuel independent enough to stay on as chairperson. In a statement, all it would say on the matter was:

“The Sarb, as a regulator does not comment on individual institutions.”

However, it pointed out that the Prudential Standards on governance of insurers only became effective on July 1, 2018. 

Even taking this into account, when Manuel was appointed as the chairperson of OMEM (which later become Old Mutual) in March 2017, the move seemingly contravened the Governance and Risk Management Framework for Insurers in notice 158 of 2014.

This notice, released by the Registrar of Long-term Insurance, defined an independent non-executive as someone who is: “not a material supplier or customer of the insurer, such that a reasonable and informed third party would conclude in the circumstances that the integrity, impartiality or objectivity of that director is compromised by that relationship.”

All of this means that under both the old and new regulations, there were clear stipulations defining what constituted independence in a director.

In summary, it is unclear whether Old Mutual and the Prudential Authority believe that Manuel, despite being associated with a company that has received hundreds if not billions of rands in payment from the insurer, can still “act in an independent manner” on judgement “by an objective outsider”.

So is Manuel independent enough to continue as chair? 

Schmulow is hesitant to make a call on Manuel’s independence. “Ultimately, if the Prudential Authority believed that this individual was not independent, and they or the company disagreed, it would be for the tribunal created under the Financial Sector Regulation Act to decide, and/or a court.”

Schmulow says though Manuel’s relationship with Rothschild can be seen to undermine his independence, it is not as clear-cut as it seems.

“It could certainly be argued, however, that as a board member of a supplier, the individual may face conflicts of interest. But then again, a tribunal or court may decide that he could simply recuse himself from any discussions or decisions that involve that supplier.”


It is also uncertain whether Manuel (or any of the other directors) underwent an independence test.

This test, which is becoming standard practice for many large companies, would have enabled Old Mutual to assess whether Manuel’s relationship with the Rothschild Group prevented him from acting or being seen to be acting in an independent way.

The test, like the ‘bright line’ test enforced by the New York Stock Exchange, would, among other things:

  • Determine if a director has no material relationship with the listed company (either directly or as a partner, shareholder or officer of an organisation that has a relationship with the company).
  • Have the board assess the independence of any director who would serve on the compensation committee, and whether directors have a relationship that would affect their ability to act independently from management in connection with the duties of the compensation committee member.

Old Mutual’s 2019 Board Charter does not make any mention of an independence test for its directors.

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Of course he is not independent.

Good question Larry – – I was grilled for a day by the SA Regulator (then still FSB) to become a director of SA Insurance company – late chairman.
The UK Regulator (then FSA) grilled me for two days to test my independence for to serve on the board of a US Insurer based in London.
Seems with Manuel – the big guys tell the Regulator what to do and Mr Manuel is – after all – the darling of SA business.

The only reason he is in the position is because of his connections to the ANC.

We know how competent politicians are at business, so I don’t understand how they go from government into big business.

As far as I am concerned they should not be allowed to occupy board or chairman ship positions in companies after their term. They don’t need the money, and they have been involved too closely to the shenanigans that go on at the coalface to be trusted with a company policy decision.

And then you will moan about why professionals and technocrats won’t work as ministers. Please try to think things through before commenting.


Anything is on fire today.

Did you perhaps find a hair in your quiche?

I think you guys are just struggling to think of obvious immediate intended consequences to such an idea. You can’t even imagine the unintended consequences.

Or maybe you are just making sure you have a way to moan – either way.

Astonishing that one can even has to debate about this wrt Manuel.

He’s as “independent” as the proverbial mother-in-law is. And like her, it doesn’t make a damn of a difference whether she recuses herself or not!

The very fact that one has to consider a “recusal” as an alleviating strategy, indicates acceptance of the huge risk this person represents.

Why would any board even consider taking on risk like this that could compromise the company in ways that just cannot be foreseen?

The ONLY reason for tolerating such a “risky” person as a director would be because there was no alternative, AND it was ESSENTIAL to have that position filled.

Manuel’s appointment (and continuation in the job) is untenable and dubious.

It provides strong support for the argument that the OM board truly is “delinquent”.

Communists are generally not independent!!!

Yes, because he is totally a communist raaaight. Remember how seriously people took your “rooi gevaar” thing in the past and where it got you? Serious credibility gap.

Classic Anything comment.

Did you have a point to make? Or are you defending the intelligent statement that TM is a communist?

Another zinger from Anything.

Another nothing from a someone without anything to say. This is why you lot aren’t taken seriously anymore. You make statements you can’t back up!

Manuel is not a communist … period.

Manuel is a “part” of doing business in this highly political country, He may not be the best candidate or have the required experience but he is a “necesseary” cost to operate smoothly in South Africa. As the saying goes `”The only force more ruthless and cynical than the business of big politics is the politics of big business.” – served thick and cold by Old Mutual.

Is anyone independent of the person or entity which pays their wage?

OM Shareholders ought to be able to sue the directors and board when shareholder value is intentionally placed at jeopardy.

Judging by how long this has dragged on, maybe we should start looking at who is buying OM shares at this low price.

So, a company decides to employ and keep a person who would need recuse himself when he is most needed.

Great article.

The JZ of Old Mutual seems to be too powerful. The law only applies to the rest of us.

Larry! deleting my comments about Mr Manuel! Why ? does the truth hurt?If I said anything untrue let me know-but do not censor to please yourself!
The arms deal, adultery , conflict and Moyo management issues ..are facts!

Yes, the articles on moneyweb are vigorously pro-government and your rational well thought out and written comments are been censored. What an unpopular opinion you are preaching to convert the masses of pro-ANC readers and commentators on this platform.

Being censored. Not been censored.

We’ve come to expect a higher standard from you, Anything.

Written tongue in cheek?

no, I am super serious guys.

All this splitting of hairs…does it really matter?
Red tape will kill this country.
Rather than splitting hairs …… capitise on new business opportunities by making it easy to do business
And employ decent people on your boards – those with experience and credibility not because of their skin colour or political orientation.
Just my opinion

Obviously not independent – old mutual shareholders and policy holders don’t keep a proper eye on the company.

End of comments.





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