Peter Moyo
Peter Moyo

Activist warns of reputational damage to Old Mutual

By Edward West Time of article published Jul 17, 2019

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CAPE TOWN - Shareholder activist Theo Botha has warned the continuing public spat between fired Old Mutual chief executive Peter Moyo and chairperson Trevor Manuel would become a reputational disaster for the country’s biggest life insurance group, irrespective of the outcome in court.

Botha said the rift might bring changes in the way conflicts of interest were managed in corporate South Africa.

He said the company failed to manage issues of potential conflict of interest “right at the outset.”

Botha said Moyo’s firing had raised a number of new governance problems such as whether it paid Manuel’s legal fees and the specific nature of the large contingent liability brought over from the UK into the new local listing.

Gordon Institute of Business Science founding director Professor Nick Binedell said the issue represented not only a risk to Moyo, but to Old Mutual over the longer term.

Binedell said, however, that it was not likely to represent as great a risk to the business as would, for instance, a major product failure.

Institute of Directors in Southern Africa chief executive Parmi Natesan said that the fallout issues had put conflicts of interest at a corporate into the spotlight.

Trevor Manuel

“Conflicts in the boardroom need to be carefully managed to ensure that they do not put either the director or the organisation at risk - or create a negative public perception.

"And the fundamental key to managing conflicts of interest is open, full and candid disclosure and appropriate management,” Natesan said,

“The reality is that conflicts of interest are a fact of business life. Their existence doesn’t necessarily mean impropriety - but failing to declare and manage them means impropriety is likely to be strongly suspected. The consequences can be severe.”

Yesterday, the South Gauteng High Court postponed Moyo’s application to be reinstated to tomorrow to hear arguments on the matter.

Moyo was fired in June after relations between him and Manuel soured amid allegations and counter accusations of conflicts of interest.

At the centre of the battle initially was NMT Capital, which was founded by Moyo and two others in 2002, and the declaration of ordinary dividends by the investment firm last year, even though Old Mutual claimed that it should have been paid its preference dividend first.

Old Mutual bought 20percent of NMT as part of its black empowerment efforts.

Moyo has a 25percent stake in NMT.

Old Mutual took issue with the 2018 payment of R115million in ordinary dividends in March and July 2018 by NMT, while it was still owed preference share dividends.

The ordinary dividend was also declared without a solvency analysis, as NMT still owed the Industrial Development Corporation R157 million, Old Mutual claimed.

Moyo has applied for an interdict preventing the insurer from appointing his replacement, and to declare his suspension and dismissal unlawful.

He said he also intends to lodge a damages claim and the board to be declared “delinquent directors”.

Old Mutual claims that there was no legal basis that his firing was in breach of contract.

Moyo has also objected to the alleged payment of legal fees by Old Mutual in a litigation case involving Manuel, which Old Mutual rejected.

Moyo also claimed Manuel’s involvement with Rothschild, the company that advised Old Mutual on the processes of shifting a contingent liability to South Africa from the UK, represented a conflict interest on the part of the chairperson, claims that Old Mutual also rejected.

* The reporter has shares in Old Mutual.


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