Old Mutual has made an impassioned plea to the high court, saying the potential imprisonment of board members – if they are found guilty of contempt of court for not allowing ousted CEO Peter Moyo to return to work – would be “excessive and inappropriate”.
Old Mutual was responding to Moyo’s application at the high court in Johannesburg to declare the insurance group’s 13-member board to be in contempt of court for blocking him from returning to his office three times.
Moyo has been prevented from resuming his duties as CEO despite the court ordering twice that he should be temporarily reinstated as CEO since his firing on June 18, following a “breakdown of trust” between him and the board, chaired by Trevor Manuel.
In court papers dated Tuesday (October 8), Old Mutual’s head of legal Craig McLeod says the imprisonment of the insurance group’s non-executive directors (or board members) would be an “inappropriately harsh punishment and certainly not warranted”.
In August, Moyo asked the high court to censure the conduct of Old Mutual board members by declaring them to be in contempt of court because they “failed” to comply with a court order that reinstated him as CEO. A contempt of court offence relates to being disobedient or disrespectful towards a court of law regarding its judgments/orders.
If the high court finds members of Old Mutual’s board to be in contempt of court, they might face hefty fines or imprisonment. Moyo is pushing for the latter, saying board members need to argue in court why they should not be committed to imprisonment for six months or a period determined by the court.
McLeod argues that the insurance group’s directors have “at all relevant times” handled the axing of Moyo in a manner that they believe is “in good faith” and “in the best interest of Old Mutual”.
Board members ‘did not act in their personal capacity’
He adds that Old Mutual board members have not acted in their personal capacities but rather discharged their fiduciary duties as directors – thus their imprisonment, which is a personal sanction, would not be appropriate.
A more appropriate sanction, if board members are found guilty of contempt of court, would be, among other things, a suspended sentence, a fine or a warning.
“It is respectfully submitted that if the court finds that the respondents [Old Mutual board members] have acted in contempt of court, then, in the circumstances of this matter, remedies of this nature would be adequate,” McLeod says in the court papers.
Moyo wants imprisonment
But Moyo believes the “failure” by Old Mutual to reinstate him “amounts to self-help, anarchy, and unlawfulness”.
“The Old Mutual board was not permitted to ignore and fail to implement a court order simply because it does not agree therewith or because it is uncomfortable with such implication,” Moyo recently said in his contempt of court application.
He said Old Mutual’s conduct in opting to “willy-nilly ignore a court order” undermines the dignity of the court and contravenes section 167 (5) of the constitution, which provides that “an order or decision by a court binds all persons to whom it applies”.
Moyo is also vexed that Old Mutual fired him again – issuing him with a second notice on August 21 that terminated his employment contract with the insurance group. The first termination notice was given to him on June 17.
Moyo said his second firing is another count of contempt of court.
However, McLeod says Moyo’s employment contract was lawfully terminated by the second notice “in a manner permissible in law” as it was “logically and legally” distinct from the first termination notice.
The difference in the second notice, he says, was that the notice stated that his continued employment relationship with Old Mutual was “untenable” since Moyo sued the insurance group for unfair dismissal and won.
“The directors had reached the conclusion, in the course of the litigation that ensued following the giving of the first notice of termination, that irrespective of the outcome of that litigation, a continued employment relationship with Mr Moyo had become untenable and that, consequently, it was in the best interest of the company to give further notice to terminate his employment,” says McLeod in the court papers.
Moyo accepted his notice payment, cannot be reinstated
Old Mutual reiterated that Moyo is still not allowed to return to his office even though he “may be obliged to tender his services”.
This is because Moyo has been paid R4 million by Old Mutual for his six months’ notice, and in doing so, the insurance group believes it discharged its primary obligations to him after terminating his employment contract.
“He has accepted the payment and has not tendered to reimburse Old Mutual. He cannot approbate and reprobate at the same time.”
The contempt of court hearing is expected to be heard in November.
Brought to you by Moneyweb