Old Mutual’s former chief executive Peter Moyo plans to take the South African insurer to court after he was fired on Tuesday following a row over an alleged conflict of interest.
The newly-listed insurer said in a statement that it had sacked Moyo after attempts to separate amicably following his suspension as CEO in May broke down.
A lawyer for Moyo, who was suspended less than a year after becoming CEO, said Old Mutual’s statement was at best incomplete and at worst misleading, and that it had suffered no financial or other prejudice as a result of his actions.
“Mr Moyo will therefore challenge Old Mutual’s conduct in court, where we trust the truth will be ventilated,” Moyo’s lawyer said in a statement.
The breakdown between Moyo and Old Mutual makes his departure difficult and potentially costly as South Africa’s second-largest insurer could be ordered to make a payout to its former CEO if he wins his case in court.
A spokeswoman for Old Mutual said she had not seen the statement from Moyo’s lawyer and could therefore not comment.
Old Mutual shares, which rose after the insurer said in a statement that Moyo had been sacked, dropped back to 0.32% below their previous close by 15:22 GMT.
Old Mutual said Moyo’s actions since his suspension had contravened his fiduciary duties to Old Mutual, his employment contract and his notice of suspension, and that it had terminated his employment following unsuccessful attempts to engage with him.
The dispute relates to dividend payments made by NMT Capital, an investment firm Moyo founded, where he was a non-executive director and in which an Old Mutual subsidiary is the only institutional investor.
Moyo’s interest in NMT Capital was disclosed upon his employment and protocols put in place to manage the relationship.
However Old Mutual said on Tuesday that two dividend payments made by the firm in 2018, totalling R115 million ($7.8 million), were a breach of its rights as a preference shareholder because “arrear preference dividends” were unpaid at the time and preference share capital was redeemable at the time of the second payment.
Benefit of more than R30m
Moyo chaired the board meeting of NMT Capital where the second ordinary dividend was declared, and that the benefit to Moyo and his personal investment company of the payments was R30.6 million, it added.
The full-year financial statements for Old Mutual Life Assurance Company, the Old Mutual subsidiary, said the total impairment on preference share capital held in NMT Capital and NMT Group amounted to R97 million in December 2018.
NMT Capital declined to comment.
Moyo’s lawyer said Old Mutual benefitted from the ordinary dividend payments, was paid millions of rand in preference dividends and at all times had a separate director on the board who voted in favour of all the payments.
Peter Moyo’s full statement:
The Sens statement released by Old Mutual today contains assertions that at best are incomplete and at worst misleading. They require a response.
Both Old Mutual and Peter Moyo are shareholders in a company called NMT Capital. The NMT/Old Mutual relationship originated in 2005 and was acknowledged when Peter Moyo joined Old Mutual. A separate protocol was signed by both parties to regulate any potential conflicts. This protocol has not been breached by Mr Moyo in any way or at any time.
It is quite correct that NMT Capital declared dividends of R115 million last year. Old Mutual received R23 million (20%) of these dividends, in line with their shareholding. Old Mutual was also paid an additional R20 million in preference dividends.
The meeting that Peter Moyo chaired, resolved to pay an ordinary dividend of R105 million to the ordinary shareholders (Old Mutual 20%, Moyo 26.66%, amongst others). In addition, the same meeting resolved to pay an additional R37 million to Old Mutual. This included the preference dividends.
At all times, Old Mutual had a separate director on the NMT board. Importantly, he voted for all these dividends. It is therefore difficult to understand any conflict when Old Mutual were party to these decisions through this director’s representation of Old Mutual’s interests, and his voting for both sets of dividends.
In addition, members of the Old Mutual Corporate Finance team manage the relationship with NMT. No issues were escalated to Moyo from this team via the Nomination and Governance Committee of the board.
The Preference Capital was due to be repaid initially in July 2010, but has been rolled over a number of times. The last roll-over was up to 30 June 2018. Last year, NMT started engagements with Old Mutual on another roll-over. There is nothing in the contract requiring the preference share redemption to happen before a dividend is paid, contrary to any assertions made.
More importantly no financial or other prejudice was suffered by Old Mutual as a result of any action on the part of Mr Moyo. Mr Moyo will therefore challenge Old Mutual’s conduct in court, where we trust the truth will be ventilated.