Companies / 13 December 2019, 09:50am / Edward West
CAPE TOWN - He kept South Africa’s corporate world riveted throughout 2019 after a boardroom corporate governance fall-out saw him haul the country’s biggest insurer to the South Gauteng High Court, and win, not once but twice, after they fired him.
Former Old Mutual chief executive Peter Moyo’s wrestle with the company catapulted him from an ordinary business executive into one of the country’s top resisters, easily making him Business Report’s Newsmaker of the Year.
Last week Moyo suffered a slight glitch in his bid to return to the helm of the insurer when Judge Brian Mashile, who twice ruled in his favour against Old Mutual, decided to recuse himself from the case.
But the fight is far from over.
And depending on how the court proceedings unwind next year, he may still turn out to be South Africa’s biggest whistle-blower yet on governance failure in the South African corporate world.
“He has made serious allegations (about corporate governance failures), he has tested the board, he has influenced the future of the group and he has used the courts to take them on... It’s certainly unprecedented for such a case to have gone on as far as it has through the court, and for so long,” said one JSE analyst who chose to remain anonymous, when questioned about the impact of Moyo on Old Mutual and the local corporate world.
The spat between Moyo and an Old Mutual board that is led by former finance minister Trevor Manuel, has, according to many commentators, tarnished the image of a group that has invested deeply over more than a hundred years to build a reputation of a safe and exemplary repository of people’s savings, pensions and investments.
It is a story that has all the hallmarks of a blockbuster thriller.
Old Mutual suspended Moyo in May on claims of conflict of interest relating to his position as a co-founder of investment company NMT Capital.
Moyo claimed that he declared his shareholding in NMT Capital when he was hired, but the group argued that he disbursed dividends to shareholders while Old Mutual preferential dividends, an institutional investor, were in arrears. Old Mutual claims that Moyo personally benefited from approximately R30.6million.
In May the insurer suspended Moyo and fired him in June.
Moyo took to court and Mashile ordered that he be reinstated to his position.
But in August, the company fired him again in an open letter to shareholders, where it said it had become clear that a continued employment relationship with Moyo was untenable.
Moyo took to court to challenge his dismissal.
The shareholders have certainly paid for the spat.
Old Mutal’s shares have plummeted, wiping off billions in the company’s market capitalisation..
Last week Mashile threw in the towel, deciding to step down from the case after, according to Old Mutual’s evidence, Moyo’s legal team had “introduced allegations that Old Mutual was scandalising the court, putting the judge in an untenable position.”
This followed a public apology by Manuel, after he described the judge in a derogatory fashion as “a single individual who happens to wear a robe.”
Moyo’s legal team has consistently argued that he was being persecuted for raising concerns around Manuel’s alleged conflicts of interest on the boards of Old Mutual and Rothschild & Co, an international advisory firm that had previously been contracted to counsel the insurer on its managed separation process from the UK, that was completed in 2018, a claim Old Mutual has staunchly disputed. Moyo now wants all 14 of Old Mutual’s board members declared delinquent and has filed a R250m damages claim.
With Mashile recusing himself, a different judge now needs to be appointed as the legal proceedings drag on into 2020.
Describing Moyo as “brazen“, the analyst said that there is no doubt in his mind that this court case has damaged Old Mutual’s reputation, and it has given space for competitors to chip away at their market share.
“Old Mutual is large, slow moving and they needed to prove they had the right team in place post the de-merger, which they obviously hadn’t. The longer they take to appoint a new chief executive, the longer it is going to take to rebuild,” said the analyst.
Another insurance sector analyst said “the longer Moyo drags out the case, the more he stands a chance of securing a settlement out of court,” because not only has Moyo suffered reputational damage to his future career prospects after a previously highly successful career, but Old Mutual’s shareholders need this issue to go away as soon as is possible.
The analyst said that the management conflict in Old Mutual had resolved in his firm's mind once and for all as investment managers, that there is no difference between conflicts of interest and potential conflicts of interest, at management and board level.
“We won’t invest in companies any longer where there is even a potential for conflict of interest,” he said. In Old Mutual’s case there had been potential for conflict of interest with both the chairperson Trevor Manuel and the chief executive Peter Moyo, and both these potential conflicts of interest had subsequently hurt the group.
“They (the Old Mutual board) thought they could manage these potential conflicts of interest, and for a while they did, but it caught up with them in the end,” the analyst said.
Moyo’s legal representative Eric Mabuza was not immediately available for comment.
And yesterday Old Mutual closed 0.86percent higher on the JSE at R18.80. But in the year to date, the group has lost more than 15percent of its value in the market.