Old Mutual’s board will be on shaky ground if axed CEO Peter Moyo’s high court bid to get his job back is successful. Moyo is not going down without a fight and wants a new interim board to be appointed should he be reinstated.
Moyo was suspended from the life insurer on May 23 on the grounds of “a material breakdown in the relationship of trust and confidence”. He was later dismissed on June 18, four-and-a-half years before the end of his employment contract.
Moyo has launched an urgent application at the high court in Johannesburg to declare his sacking as unlawful, which would pave the way for him to be temporarily reinstated as CEO. He also wants Old Mutual chair Trevor Manuel and about 12 non-executive directors to be declared delinquent under Section 162 of the Companies Act.
There are two parts to his court application; part A deals with his “unlawful” firing and part B details his request for the court to declare Old Mutual directors delinquent. The full merits of part B have not been heard yet.
Hearings in the case started on Thursday, with Moyo’s legal counsel adding a new twist to the saga. Acting for Moyo, Dali Mpofu SC told the court that if Old Mutual directors on the board are declared delinquent, then a new interim board would have to be appointed.
Reasons for axing ‘manufactured’
Mpofu accused Old Mutual of flip-flopping on the reasons it gave for firing Moyo and said the breakdown in the relationship between both parties was “not real” but “manufactured” by the insurer. And, because of this, Old Mutual directors neglected their fiduciary duties.
When Old Mutual initially suspended Moyo, it cited a breakdown of trust and confidence between both parties. Manuel said there was no financial misconduct on Moyo’s part. The insurer later said there was a conflict of interest due to Moyo’s involvement with investment holding firm NMT Capital, which he co-founded in 2002. Old Mutual owns a 20% stake in NMT.
When Old Mutual eventually fired Moyo, it said he wrongly pocketed dividends worth about R30 million, while preference share dividends to Old Mutual were in arrears, which the insurer said was in breach of its rights as a shareholder.
Leadership vacuum could result
If judge Brian Mashile rules in Moyo’s favour, the move could thrust the insurer into a leadership crisis. It would have no permanent board or group CEO. After Moyo was sacked, Old Mutual appointed chief operating officer Iain Williamson as acting group CEO.
Mpofu said that even if Moyo is reinstated as Old Mutual CEO, he will still forge ahead with his application to censure the board through delinquency status.
Old Mutual and Moyo were close to settling when Mashile proposed that both parties should negotiate the reinstatement of Moyo as CEO for six months with full pay, after which he would leave the insurer. There was a caveat to this proposal: Moyo would have to drop part B (the court order to declare Old Mutual directors as delinquent) of his court application.
It was a proposal that was intended to restore Moyo’s dignity as he said his battle with Old Mutual had been “instantly damaging” to his reputation and “good name in the business world”. On Old Mutual’s part, it would admit to handling Moyo’s dismissal poorly.
However, neither party agreed to the proposals. The reasons were not disclosed to the court.
Hamilton Maenetje SC, acting for Old Mutual, asked the court to not grant Moyo’s application to be reinstated as Old Mutual CEO, pending part B of his application. He said court cases usually take a long time and that part B could take more than 60 days to be heard and concluded.
Regarding OId Mutual flip-flopping on its reasons for firing Moyo, Maenetje said the board lost confidence in the way in which the conflict of interest was managed and, as his employer, was not entitled to give reasons for terminating his contract on notice.
“When he [Moyo] said he has lost respect for the board and they are bullying him, we [Old Mutual] are then entitled to terminate his contract on loss of trust and confidence. It’s clear that there is no mutual respect left between both parties,” he said.
Maenetje will continue his arguments on Friday.