Old Mutual confident of legal win over Moyo

Maintains the former CEO’s investment company owes it R233m.
Peter Moyo’s assertions will be ‘defended vigorously’. Image: Moneyweb

Old Mutual is confident the court will again rule in its favour in another legal action brought against the company by its former CEO Peter Moyo, saying that no damages are due to him and that the new claims for reinstatement and damages will be “defended vigorously”.

“Mr Moyo has had a string of losses in court, based on his attempt to be reinstated,” says Old Mutual in a statement. “Prior High Court decisions, including his appeal before a Full Bench, found Old Mutual acted lawfully in its dismissal of Mr Moyo.

“There is no reason to believe that the court will come to a different conclusion on this occasion.”

The court case was set to start in the Gauteng High Court on Monday (January 17).

“Old Mutual does not only dispute the amount Mr Moyo is claiming, but indeed that any damages whatsoever are due. We will show in our defence that Mr Moyo was lawfully dismissed, was paid what was owed to him, and hence we do not believe he has a legal basis for claiming any amount whatsoever,” says Old Mutual.

“The claim of R250 million is after an employment tenure of only 18 months,” it adds.

“We will also request the court to ensure that the decisions of prior courts on this matter, notably the decision of the Full Bench, are duly considered and followed in these proceedings.”

Read: Why Peter Moyo pitched his damages claim at R250m

In a separate document responding to each of Moyo’s often repeated claims, Old Mutual notes that NMT Capital – the firm Moyo founded and in which Old Mutual holds an interest – actually owes the life office R233 million.

How it all went so wrong …

The problem basically started with NMT Capital, an investment company with interests in information technology, mining, construction, real estate and energy. Moyo started the company with Sango Ntsaluba and Thabiso Tlelai prior to his appointment as CEO of Old Mutual.

This was known and accepted by Old Mutual, which has an interest in NMT Capital too. The NMT Capital website states that Old Mutual is the only institutional shareholder.

Moyo and Old Mutual agreed on ways to counter any conflict of interest that might arise.

The dreaded conflict of interest arrived soon, when the directors of NMT Capital took a rather unusual decision to declare an ordinary dividend, but not to pay a preference dividend.

The ordinary dividend benefitted Moyo and the other directors of NMT Capital handsomely. Old Mutual was peeved – it owned preference shares and did not get its dues.

It retaliated, saying that Moyo, who chaired the NMT Capital meeting that decided on the dividends, had put his personal interests before that of Old Mutual.

“The suspension of Mr Moyo was announced on 24 May 2019. Mr Moyo was, on 17 June 2019, given notice of termination of employment. This situation arose because Mr Moyo had violated the terms of his employment contract by placing his private financial interests ahead of the company’s interests.

“In disregard of the provisions in his employment contract designed to manage his conflicts of interest arising from his shareholding in NMT Capital, Mr Moyo chaired a meeting of the NMT Capital Board on 4 July 2018, at which it was decided to pay an ordinary dividend of R105 million.

Moyo and his partners thus shared R84 million, while omitting to pay preference share dividends, valued at R65.4 million at the time, due to Old Mutual.

“This was a violation of the shareholders’ agreement, the preference share subscription agreement and Mr Moyo’s employment contract,” says Old Mutual.

NMT Capital’s response

NMT Capital disagreed with this at the time.

It issued a statement saying that the preference share dividends were paid. “A slight delay in the payment of the said dividend had however occurred, owing to negotiations that were continuing between NMT Capital and Old Mutual. The negotiations were in relation to an extension of the redemption date of the preference shares.

“NMT Capital had started discussions with Old Mutual aimed at extending the redemption date of the preference shares. There was also a proposal sent to that effect. These discussions were ongoing and Old Mutual was aware at that stage that NMT Capital did not intend to redeem the preference shares but preferred an extension of the redemption date.

“For its part, NMT Capital has on several occasions made attempts to meet with Old Mutual representatives to iron out these issues towards finding common ground. This includes a meeting with the Chairman of Old Mutual, Mr. Trevor Manuel, which took place on the 30th of May 2018,” said NMT Capital in its statement.

Read:

Fired twice

Old Mutual had to fire Moyo twice, after he won one court battle.

“His contract as the CEO of Old Mutual was terminated, on two occasions,” says Old Mutual. Both decisions were made in the exercise of Old Mutual’s contractual rights, and Mr Moyo has from the outset abandoned any labour rights he may have had.

“A Full Bench decision in January 2020 in Old Mutual’s favour found the company had acted in a legal way in terminating Mr Moyo’s contract. The Supreme Court of Appeal subsequently dismissed Mr Moyo’s application for leave to appeal against that January 2020 Full Bench decision.

“On 17 March 2020, Old Mutual also successfully opposed another urgent application by Mr Moyo in which he attempted to interdict the company from appointing a permanent CEO,” says Old Mutual.

Read:

It adds that the legal battle is not something Old Mutual chose, but was the route taken by Moyo.

“Old Mutual anticipates the dismissal of the current claim will finally put an end to the needless rounds of litigation instituted by Mr Moyo,” according to the statement.

Old Mutual maintains that its board of directors engaged with Moyo for “months” about this matter, but it became clear that they had a difference of opinion.

“Following the exchange of various correspondence and a meeting where Mr Moyo was given yet another chance to address the situation, the Board, on the basis of legal advice, reached the difficult conclusion that his continued employment was untenable.

“Ultimately, the present court case relates to whether Old Mutual was entitled to, in terms of Mr Moyo’s employment contract, terminate his contract on six months’ notice. Old Mutual paid Mr Moyo six months’ salary, and the Full Bench has previously found that Old Mutual had every right to do so, and that Old Mutual followed the appropriate procedure in doing so,” says the life office.

The court ruled against Moyo in all his recent attempts to have his dismissal reversed.

  • On January 14 2020, a full bench of the South Gauteng High Court upheld with costs Old Mutual’s appeal against an order made on July 30 2019 temporarily reinstating Moyo pending the outcome of further litigation. The full bench confirmed that Old Mutual had acted lawfully in terminating Moyo’s contract.
  • On March 23 2020 the Supreme Court of Appeal dismissed with costs the application by Moyo for leave to appeal the January 14 full court judgment in favour of Old Mutual.
  • Just prior to this, on March 17 2020, the high court dismissed Moyo’s application for an interdict prohibiting Old Mutual from hiring a permanent CEO.
  • In August 2021 an interlocutory application brought by Moyo for the indefinite postponement of the hearing of his application to have the Old Mutual non-executive directors declared delinquent was denied.

Yet another court action is still in process. A hearing of a consolidated application to have the Old Mutual non-executive directors declared delinquent and to have them declared in contempt of court took place on November 4 last year before a full bench of the South Gauteng High Court, and the decision is pending.

Moyo’s take

NMT Capital and Moyo’s lawyers did not respond to requests for comment.

Moyo’s earlier allegations that Old Mutual did not follow proper process to dismiss him were countered by Old Mutual, which said it was entitled to terminate his employment by giving notice as prescribed in his contract of employment.

His claim that he was therefore still the CEO of Old Mutual and should be allowed to return to his office was dismissed as well.

“Mr Moyo’s contract of employment was terminated,” said Old Mutual at the time. “The second notice of termination dated 21 August 2019 is in force and precludes Mr Moyo from returning to the workplace. He is neither required nor permitted to return to the office.”

Moyo also maintained that his employment contract allowed him to receive dividends from NMT Capital while in the employ of Old Mutual. Old Mutual agreed, but said the “ordinary dividend was declared and paid in contravention of the preference share agreement” between the parties, leading to the assertion that Moyo looked out for himself first.

Lastly, there is the money …

While Moyo claimed that NMT Capital has repaid all capital owed to Old Mutual, the latter disagrees.

“NMT Capital voluntarily elected to fully redeem the redeemable NMT Capital preference shares including all current and arrear preference dividends on 27 August 2019 in the amount of R47 million,” according to Old Mutual.

“Old Mutual’s other exposures to NMT related [to] preference shares remain payable to the amount of R233 million.”

It looks like the issue won’t be put to bed this week after all.

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