The spat between Old Mutual and its former CEO Peter Moyo has intensified, with the insurer accusing him of personally approving governance procedures that would manage any potential conflict of interest of board chair Trevor Manuel during the separation of the South African business from its UK operations.
Moyo, who was suspended on May 23 and fired on June 18 over a conflict of interest involving dividends that were paid by his investment holding firm NMT Capital, accused Manuel of having a “triple conflict of interest”. This was because Manuel was chair of Old Mutual Group SA, Old Mutual plc and advisory firm Rothschild & Co during the insurer’s managed separation.
Read more here: It’s Moyo versus Manuel as Old Mutual drama escalates
This allegation was contained in Moyo’s urgent court application at the Johannesburg High Court in which he seeks to be temporarily reinstated as CEO and claims damages for being fired four years before the end of his contract with Old Mutual.
Moyo said he raised concerns in March 2018 about Manuel’s “triple conflict of interest” involving Old Mutual’s managed separation, which would see the insurer move its primary listing from the London Stock Exchange to the JSE. Manuel ignored Moyo’s objections and “from that point on, Mr Manuel’s attitude towards me deteriorated”.
Millions in fees
Moyo alleged that a proposal to transfer a R5 billion contingent liability from Old Mutual plc to what is known today as Old Mutual Limited – a key aspect of the managed separation – was at the heart of Manuel’s conflict of interest. Rothschild & Co was one of the advisors on the transaction and “stood to gain [and eventually did gain] hundreds of millions of rands in fees”.
Considering that Manuel was a director of Old Mutual SA, Old Mutual plc and Rothschild, Moyo believes that he should have recused himself from the managed separation transaction.
In its affidavit that responds to Moyo’s court bid, Old Mutual company secretary Elsabé Kirsten says the company finds his allegations “astonishing” because Moyo – while he was CEO – was “fully aware” that all questions and concerns regarding Manuel’s potential conflicts of interest were “carefully considered through proper governance structures”.
Kirsten said Moyo was involved in a meeting of the board’s related party transaction committee on March 23, 2018, in which the R5 billion contingent liability from Old Mutual plc to present-day Old Mutual Limited was approved.
“Not only was the applicant present at that meeting,” said Old Mutual, but Moyo supported and approved a resolution to implement the contingent liability.
Old Mutual said Manuel’s relationship with Rothschild began before he joined the insurer’s board. And Rothschild’s mandate to advise Old Mutual on the managed separation process “predated the board chair [Manuel] joining the Old Mutual board”.
“These relationships were known and disclosed,” it added.
Gupta legal fees
In another incident, Moyo questioned why Old Mutual was paying Manuel’s legal fees in his matter against the controversial Gupta family and their associates as it didn’t have “anything to do with Old Mutual”. This resulted in a further breakdown in the relationship between Moyo and Manuel.
Old Mutual called Moyo’s allegation a “hypothesis” that has “no factual basis”. The company claimed that it was Moyo himself who approved and supported the payment of Manuel’s legal costs.
“As a matter of fact, the applicant himself [Moyo] was involved in the decision in 2017 regarding legal costs of the board chair [Manuel], because this was in the interests of Old Mutual,” said Old Mutual’s Kirsten.
“I am advised that the decision to pay for the relevant legal costs and manage the legal strategy was initiated by Old Mutual and not the board chair [Manuel].”
To be specific, Moyo, according to Old Mutual, instructed the company’s chief legal officer Craig McLeod to proceed with Manuel’s legal battle – thus payments for legal fees were processed. Old Mutual said Moyo was also part of discussions on how Manuel’s legal expenses would be accounted for in the company’s financial statements.
The matter is to be heard in court on July 16.