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Moyo vs. Old Mutual: 5 reasons why the corporate warfare continues

Aug 15 2019 06:01
Tehillah Niselow, Fin24

The Gauteng High Court in Johannesburg will on Friday hear round two of the legal battle between on-and-off again Old Mutual CEO Peter Moyo and the company. 

This time about whether Moyo can in fact be reinstated with immediate effect despite a pending appeals process.

What's in a ruling?

Old Mutual will argue Judge Brian Mashile’s ruling in late July reinstating Moyo was final and their notice to appeal therefore suspends the order. Moyo’s legal team will meanwhile argue that it was an interim ruling and notice to appeal does not suspend the order, meaning that Moyo is entitled to return to work immediately.

The hostilities date back to Moyo’s suspension in May and axing in June by the JSE-listed financial services company, citing conflict of interest and alleged breakdown in trust. He challenged his dismissal in court and was successful, pending Part B of his application which must be filed 60 days from the judgment. Litigation related to the latter, which is yet to get underway, will seek to reclaim damages for harm to his reputation and have Old Mutual’s entire board declared delinquent directors under Section 162 of the Companies Act. Old Mutual has applied for leave to appeal the ruling.

Moyo and the country’s second largest insurer have different interpretations of the initial court ruling and have turned once again to the courts as the fight becomes increasingly acrimonious.  

Here are 5 reasons why neither side is backing down, despite concerns about the impact of the uncertainty on investors

1. Undue Haste

Moyo claims that the Old Mutual board meeting which decided to appeal the court judgment on July 30 was “unlawful and improperly constituted”. In his affidavit to the court submitted on Monday, Moyo describes that prior to the board meeting, he called the CFO, Casper Troskie, and informed him that it would be unlawful to hold a board meeting without extending an invitation for him to attend.

“Undue haste was intended, by hook or crook and even before any careful analysis of the judgment, simply to block my return to work as ordered by court,” Moyo states.

2. Contempt of Court

Moyo will ask the High Court to declare the Old Mutual directors in contempt of court for failing to reinstate him immediately after the July 30 ruling. “The Old mutual board was not permitted to ignore and fail to implement a court order, simply because it does not agree with it,” Moyo’s affidavit reads. 

He maintains that the directors should show within 30 days why they should not be jailed for six months or a period in the court’s discretion, for not upholding a court ruling, according to his legal documents. 

3. David vs. Goliath

Moyo in his legal papers dubs the case David vs Goliath - where he as an individual is taking on the might of Old Mutual with a market capitalisation of R86bn. He believes the court should not give the company a declaratory order barring him from work as he has limited financial resources and is not able to “match it pound for pound in its torrent of litigation” against him. 

He also warns that the court ruling in favour of Old Mutual will have a negative impact on whistleblowers. He maintains he was a victim of Old Mutual chairperson Trevor Manuel. This after he raised what he considered to be Manuel's conflicts of interest relating to the Managed Separation of the company.

This refers to the advisory role Rothschild & Co in SA played in Old Mutual plc delisting from the London Stock Exchange and moving its primary listing on the JSE as Old Mutual Ltd in June 2018. Manuel chaired both Rothschild and Old Mutual. 

4. Rejected settlement 

During day one of arguments in July, Judge Mashile recommended that the parties try and settle. This was rejected. Another attempt to remove the courts from the boardroom battle was also fruitless. In a letter dated August 5 from Moyo's attorney Eric Mabuza to Bowmans Attorneys, which represents Old Mutual, Mabuza suggested that the company withdraw the application for a declaratory order to bar Moyo from work but continue with the leave to appeal process.

Mabuza further proposed that Moyo be re-instated as per the court order and take special leave until the outcome of the second part or Part B of his application, with full benefits except for his physical presence at the office. However, in a letter from Bowmans to Mabuza on August 6, they state that Moyo was paid half a year's salary as part of his dismissal conditions in June, and they cannot be expected to agree to his reinstatement while he litigates against the directors.

5. Untenable relationship with exceptional circumstances

Old Mutual’s affidavit filed on August 1 for an urgent declaratory order to direct whether Mashile’s judgment was final says there was an untenable working relationship with Moyo as he was trying to have the entire board declared delinquent directors as Part B of his application which is yet to get underway. 

“If executed, [the orders] will reinstate a CEO who has explicitly impugned the integrity of the company’s board of directors, who detected them as delinquent and has indicated his intention to have them removed from office on that basis,” said head of legal for Old Mutual Craig Mcleod in an affidavit. 

The company’s affidavit expresses concern about the impact the ongoing feud is having on the financial listed company with 30 000 employees, operating in 13 African countries and China. 

“It is simply not an option to continue to risk the company’s stability over a dispute with an individual employee. This amounts to exceptional circumstances and shows the applicants [Old Mutual] will suffer irrevocable prejudice if Mashile's orders are executed now,” the company’s affidavit stated. 

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