CAPE TOWN – Old Mutual Limited chairperson and former minister of finance Trevor Manuel and a host of other company directors may be declared delinquent for breaching the Companies Act where shareholders in the financial services group lost more than R5 billion as a result of their conduct.
In court papers, former Old Mutual chief executive Peter Moyo, who was fired in early June, blew the lid on the conduct of the group's directors, alleging that Manuel had engaged in financial improprieties and breaches of corporate governance practices, which ultimately led to his dismissal.
“Old Mutual shareholders reportedly lost more than R5 billion in its value as a result of the total unnecessary conduct of its directors. This alone amounts to delinquency as envisaged in the Companies Act,” said Moyo.
Old Mutual hit back, indicating that it would oppose Moyo’s application and would use the court process to respond to his claims.
Old Mutual chief communications officer Tabby Tsengiwe said: “It would not be appropriate to comment further while legal proceedings are pending, and we would caution the media or any other party against publishing any untested allegations as fact.
“The interests of our stakeholders remain paramount and thanks to strong leadership continuity, continued management focus and an unrelenting commitment to putting customers first, Old Mutual is making solid progress in meeting its targets. Old Mutual’s business operations remain unaffected by the dismissal of Mr Moyo.”
According to Moyo, trouble started in March 2018 when he approached Manuel over what he viewed as a triple conflict of interest around a R5bn commercial project – known as Managed Separation – which involved the de-listing of Old Mutual PLC from the London Stock Exchange, and the proposed listing of the company on the JSE Stock Exchange.
“It so transpired that one of the aspects of this exercise involved the proposed transfer of a large liability or obligation valued at more than $400 million or R5bn from Old Mutual PLC to the present-day Old Mutual Limited.
“Were it to transpire that the assumption of that liability by Old Mutual in South Africa would be rejected, then the entire Managed Separation project would most probably have been aborted.”
According to him, one of the companies which stood to benefit the most from the realisation of the Managed Separation project, was Rothschild & Co, which stood to gain (and eventually did gain) hundreds of millions of rand in fees as one of the transaction advisers.
Moyo further alleges that while this would be normal at face value, the problem lay with Manuel being a director of the three companies, including Rothschild & Co.
“I openly voiced my objections to Mr Manuel about the impropriety of his participation in any discussions regarding our proposed assumption or takeover of the Old Mutual PLC (contingent) liability, which was in the nature of a guarantee in favour of an American company.
“Mr Manuel ignored and failed to act on my raising the alarm in that regard despite the obvious seriousness of the transgression. He continued to participate in the discussion of this matter,” said Moyo.