It’s Moyo versus Manuel as Old Mutual drama escalates

Axed Old Mutual CEO Peter Moyo has come out swinging to get his top job back at SA’s second-largest insurer: he is seeking an order from the Johannesburg High Court to declare chairman Trevor Manuel a delinquent director under the Companies Act.

In a nasty twist to the saga, Moyo has accused former finance minister Manuel of having an “ulterior motive” and “acting in bad faith” when handling the former’s initial suspension from Old Mutual on May 23, and his subsequent dismissal on June 18.

In firing Moyo, Old Mutual cited a conflict of interest due to his involvement with investment holding firm NMT Capital, which he co-founded in 2002 with Sango Ntsaluba, the founder of SA’s first black-owned audit firm SizweNtsalubaGobodo, and Thabiso Tlelai, a hotel and property magnate. Old Mutual is NMT’s only institutional shareholder, with the insurer owning a 20% stake, which it earned through a series of funding it provided to NMT totalling R201.5 million since 2004.

Moyo declared his NMT business interest when he returned to Old Mutual in 2017, first when he headed the company’s emerging markets arm before taking up the group CEO role. And Old Mutual was comfortable with Moyo’s declaration and its processes to manage the conflict.

On Friday (June 28), Moyo launched a 165-page urgent application at the high court to be temporarily reinstated as Old Mutual CEO and to prevent the insurer’s board from appointing his successor until the court has made a ruling on the application.

Moyo also wants Manuel and 12 non-executive directors of Old Mutual to be declared delinquent under section 162 of the Companies Act – a move that could see the high court censure their conduct and sully their reputations.

“The news [of the initial suspension] was devastating and humiliating to me,” Moyo said in his court papers. “At my level and status of employment, the mere suggestion that I was guilty of a conflict of interest was instantly damaging to my reputation and good name in the business world and society in general. I was deeply hurt.”

He added: “I also get aggrieved by the fact that Old Mutual had seemingly breached its undertaking to protect my integrity, good name, and confidentiality.”

About Trevor Manuel

A large section of Moyo’s court application details a severe breakdown in his relationship with Manuel, indicating that their interactions at a board level were adversarial.

When the NMT Capital conflict of interest matter was first mentioned at an Old Mutual meeting on March 7, 2019, Moyo said he was informed by an unnamed board member that Manuel was “gunning” for him by “bullying other directors to pursue the NMT matter for some inexplicable and ulterior purpose”.

“From this interaction, I confirmed the distinct impression I had gained that the chairman [Manuel] was determined to get rid of me using the NMT matter as an excuse and that he was putting undue pressure on other directors, who were unfortunately and improperly allowing themselves to be bullied and to which they ultimately clearly succumbed.”

Breach of Companies Act

To recap, as a shareholder in NMT, Old Mutual would enjoy preference dividends from the firm. Old Mutual said two sets of ordinary dividends were made by NMT during its 2018 financial year – totalling R115 million – without paying preference dividends, thus breaching the insurer’s rights as a shareholder. This would also breach the Companies Act, which stipulates that preference shareholders should be paid dividends before ordinary shareholders.

Moyo has rejected Old Mutual’s version of events, saying in October 2018 that the insurer was allocated R37 million as a debt repayment, which mainly constituted the Old Mutual preferential dividends and a further R27 million in ordinary dividends. He said there was a delay in the payment of dividends to Old Mutual, which was communicated to the insurer and accepted by its representative on the NMT board, Mobasheer Patel.

Moyo said he doesn’t believe his axing is linked to a conflict of interest or late preference dividend payments but relates to him raising alleged improprieties on the part of Manuel and Old Mutual’s non-executive directors.

He cites two incidents.

In March 2018, Moyo said he raised concerns about Manuel’s “triple conflict of interest” regarding Old Mutual’s managed separation, which would see the insurer move its primary listing from the London Stock Exchange to the JSE.

He said the managed separation involved a proposed transfer of a contingent liability or obligation, valued at more than $400 million or R5 billion, from parent company Old Mutual plc to Old Mutual Limited. Financial advisory firm Rothschild & Co was one of the advisors to the transaction and “stood to gain [and eventually did gain] hundreds of millions of rands in fees”.

Moyo said Manuel was a director of Old Mutual plc, chairman of Old Mutual limited and chairman of Rothschild at the same time, thus creating the “triple conflict of interest”.

“I openly voiced my objections to Mr Manuel about the impropriety of his participation in any discussions regarding our proposed assumption or takeover of the Old Mutual plc contingent liability …

“Mr Manuel ignored and failed to act on my raising the alarm in that regard, despite the obvious seriousness of the transgression. He continued to participate in the discussion of this matter. From that point, Mr Manuel’s attitude towards me deteriorated.”

Why was the company paying Manuel’s ‘Gupta’ legal fees?

In another incident, Moyo said he 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”.

Moyo said he raised this matter with the board’s corporate governance and nomination committee, but Manuel “tried to dissuade me from doing so”. The committee rejected Moyo’s concerns about Manuel’s legal fees.

“It would be an understatement to say that after that episode and as a result thereof, all hell broke loose and Mr Manuel treated me with open hostility … I felt victimised and arbitrarily discriminated against.”

Old Mutual was not available to comment on Moyo’s allegations. Moneyweb will provide an update when the insurer comments.

Moyo wants Old Mutual to indicate whether it will oppose his application by July 1. The matter is to be heard in court on July 16 if the insurer intends to fight the application.

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