The Institute of Directors in Southern Africa (IoDSA) has weighed in on the battle between Old Mutual against its former CEO Peter Moyo, following the insurance company’s confirmation that it would file court papers opposing the application by Moyo to be reinstated.
According to the CEO of IoDSA, Parmi Natesan, the decision to terminate the contract of its CEO and his response regarding the chair of the board, Trevor Manuel, had once again put conflict of interest into the spotlight.
“While not wanting to prejudge this particular issue, we are reminded these are not simple matters. Conflicts in the boardroom need to be carefully managed to ensure they do not put either the director or the organisation at risk – or create a negative public perception,” said Natesan.
She said that a conflict of interest arose when there was tension between competing interests, whether personal, financial or other.
“These conflicts might be real, potential or perceived; perceived conflicts can be as reputationally damaging as real ones and should also be managed,” she said.
In the meantime, Old Mutual has confirmed that it would file papers opposing Moyo’s application to be reinstated and accused its former CEO of deliberately attempting to divert attention from him to Manuel.
In his court application, Moyo detailed a severe breakdown in his relationship with Manuel, indicating that their interactions became hostile after he raised concerns about Manuel’s “triple conflict of interest” regarding Old Mutual’s managed separation from the London Stock Exchange to the Johannesburg Stock Exchange.
Old Mutual spokesperson Tabby Tsengiwe said the company was looking forward to delivering a full response to Moyo’s allegations this week.
“The suggestion by Mr Moyo, also reported in the media, that the Old Mutual non-executive directors are under the sway of the board chair, and were incapable of exercising independent judgment in reaching the conclusion that there has been a breakdown in trust and confidence in Mr Moyo, is totally without foundation,” said Tsengiwe.
Natesan said in cases where conflicts were pervasive, handling them was simple.
“They should just be avoided rather than managed. For example, a director should not serve on the boards of two competing companies,” she said.
Other conflicts can be manageable because they are not as pervasive.
“In the case where there is such a conflict, and the parties still want to work together, it is highly advisable to put comprehensive safeguards in place,” said Natesan.
She said these safeguards include identification and appropriate management of conflicts by the chair and company secretary, as well as comprehensive and timely disclosure from the conflicted individuals themselves.
“Directors have a duty to avoid or manage conflict of interest. This requires directors with an interest in a matter to be discussed by the board, to declare that interest at first instance,” she said.