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Everything you need to know about Old Mutual vs. Moyo ahead of the judgment

Jul 30 2019 05:00
Fin24

Former Old Mutual CEO Peter Moyo is expected to hear his fate in the Johannesburg High Court today after he hauled his former employer to court in an attempt to overturn his axing.

This after Moyo and Old Mutual argued the respective merits of their case over two days before Judge Brian Mashile last week.

Moyo launched an urgent application against Old Mutual following his suspension in May and axing soon after. At the time of his suspension - which caused Old Mutual shares to fall the most on record - the company cited a "material breakdown in trust and confidence" between Moyo and the group's board.

Here's everything you need to know as D-day looms for Moyo:

1. What's it all about?

Old Mutual announced in May that Moyo had been suspended but did not provide much detail at the time. In an update to shareholders, it said the board had decided to suspend Moyo after "various engagements" with him.

In an email to staff, which Fin24 saw, Old Mutual chairperson Trevor Manuel wrote that Moyo's suspension was not related to performance, but was "as a result of a conflict of interest matter related to [Moyo's] personal interests".

It later emerged that the "personal interests" in question were related to Moyo's position as a co-founder of investment company NMT Capital.

Moyo had declared his shareholding in the firm when he was hired by Old Mutual. However the company says a conflict of interest arose when Moyo disbursed dividends to shareholders while Old Mutual preferential dividends, an institutional investor, were in arrears. Old Mutual claims that Moyo personally benefited from approximately R30.6m in dividends which he "did not at any stage raise" with Manuel.

2. Was Moyo subjected to a disciplinary hearing before he was axed?

No. The company's failure to institute disciplinary proceedings against Moyo was a key factor in his argument last week. Moyo's legal team highlighted that Old Mutual was duty bound to take Moyo through a disciplinary hearing, and that the company violated its own disciplinary processes by denying him the chance to cite his side of the story.

His legal team also argued that, in terms of its disciplinary code, the company ought to have appointed an independent chairperson who is "impartial and unbiased" to preside over an arbitration process before Moyo was sacked.

3. But what has Trevor Manuel got to do with it?

Manuel is Old Mutual's chairperson and Moyo alleged in court papers that he was instrumental in his axing.

Moyo claims that Manuel was "gunning" for him after he raised several red flags with the group's board relating to what he says is Manuel's "triple conflict of interest" .

In court papers, Moyo says Manuel's conflict of interest was in relation to the company's managed separation - the process that saw it delist Old Mutual plc from the London Stock Exchange and list Old Mutual Limited on the JSE in June 2018.

Moyo says one of the companies which stood to benefit from the exercise - which involved a transfer of R5bn from Old Mutual plc to the new entity - was Rothschild, of which Manuel was also chairman. At the time, Manuel was also a director at Old Mutual plc and chairperson of Old Mutual Limited. Moyo says it was then - in March 2018 - when friction between him and the company first developed.

In his court papers, Moyo goes on to allege that he again raised a red flag with the board, via the Corporate Governance and Nominations Committee - or NomCom - regarding the "improper non-disclosure of a payment amounting to millions of rand, which was paid by Old Mutual in respect of [Manuel's] legal fees for his much-publicised legal battle relating to the Guptas and their associates". Manuel was chairperson of the NomCom, which is comprised of eight other directors.

4. What exactly does Moyo want?

In essence, Moyo wants to be reinstated to his position as CEO and for the court to interdict Old Mutual from filling his position. He wants the court to declare his suspension and his dismissal unlawful and unconstitutional. 

Additionally, Part B of his application, intended to be set in motion within 60 days of the outcome of Part A (Friday's judgment), would see him lodge a damages claim. He also wants the court to declare the 17-member board "delinquent directors".

5. What is the crux of Moyo's argument?

Chief among Moyo's grievances are victimisation claims, which are mainly attributed to Manuel. He says his relationship with the chair and former finance minister deteriorated after he raised the issue of Manuel's potential conflict of interest in the Managed Separation. 

Moyo further states that Manuel "grossly mishandled" the issue of breach of protocol in the NMT saga, which came to his attention towards the end of April 2019. The axed CEO also argues that his reputation has been damaged. 

He says at his level and status of employment, the mere suggestion that he was found guilty of conflict of interest "was instantly damaging to my reputation and good name in the business world and society in general".

6. What does Old Mutual say about it?

The company has challenged all of Moyo's assertions and says that Moyo was not the whistle-blower that he claims to be in terms of his allegations against Manuel. The firm told the court that the decision to pay Manuel's legal costs was approved by the full board of Old Mutual, and Moyo had signed off on the expense which was included by the auditors in the company’s financial statements.

It has argued that Moyo's application should be dismissed with costs. Old Mutual has also accused Moyo of failing to uphold the level of trust expected of him, saying his dismissal was fair.

"In seeking the extraordinary relief that he does, the applicant’s inflated sense of self-importance is astonishing," read an affidavit filed by Company Secretary Elsabe Kirsten. The company has also argued that Moyo's constitutional rights and reputation were not violated.

Old Mutual maintains it had to make the announcement of his departure public due to listing requirements by the JSE using the stock exchange news service, or SENS, and this did not violate his right to dignity.

7. What will a judgment in Moyo's favour mean for Old Mutual?

Old Mutual's legal team has argued that even if the court finds that Moyo's dismissal was procedurally flawed, it remains at the judge's discretion whether to reinstate him and this was not an automatic consequence.

It has also argued that if Moyo returns to his position, the company will be the "ultimate loser" due to what it says is a breakdown in trust between the parties. During argument, Judge Mashile, gave both parties a chance to consult about the prospect of Moyo's reinstatement, if he were to grant the order for Moyo's reinstatement.

However, following consultation between the parties, Moyo's legal team informed the judge that "they did not find each other" adding that Moyo's proposal to the firm in relation to it had not been accepted. Details of the proposal was not revealed. Old Mutual's legal representative argued at the time that there was "no mutual respect left here".

old mutual  |  trevor manuel  |  peter moyo
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