As Peter Moyo fights back, Old Mutual’s credibility is on the line
Despite a court overturning Moyo’s firing, Old Mutual plans to defend its case, but the whole thing ‘casts a very bad light’ on the insurer
Old Mutual, fresh from an embarrassing court ruling that reinstated its fired CEO, is facing another battle over whether Peter Moyo can start working again.
The insurer said late on Tuesday that it will appeal the Johannesburg High Court judgment and that Moyo is therefore not “required or permitted to resume his duties”. Moyo arrived at the company’s headquarters on Wednesday, and will meet with Old Mutual and his legal team later in the day to resolve the situation, Moyo’s lawyer Eric Mabuza said.
“Old Mutual is clear that there has been a complete and irreparable breakdown in trust and confidence in Mr Moyo,” the company said, adding that once the appeal is filed, the court order will be suspended. Mabuza confirmed that a court order is needed to suspend the earlier ruling.
The feud between Moyo and the board, led by chair Trevor Manuel, has been fueled by allegations and counter-accusations of conflicts of interest. Moyo, who pumped his fists after Tuesday’s ruling, has brought a separate application to have the board declared delinquent directors. That may take another 60 days.
Shares in the 174-year-old insurer tumbled after the ruling, falling to their lowest since the company moved its main listing back to Johannesburg from London in June 2018. In firing Moyo, Old Mutual denied him of procedures laid down in his employment contract, the court found. The company’s board argued that it was entitled under certain provisions in the contract to suspend and dismiss Moyo without a hearing.
“It casts a very bad light on Old Mutual,” said Wayne McCurrie, a portfolio manager at FirstRand’s FNB wealth and investments unit, which doesn’t own the insurer’s stock. “It goes beyond Moyo and cuts to the credibility of Old Mutual as a company.”
In June, Old Mutual dismissed Moyo amid a dispute over his investment firm NMT Capital and the declaration of dividends, even though Old Mutual was owed preference-share payments.
The insurer had acquired 20% of NMT by funding the company founded by Moyo and two others since 2004 as part of its efforts to redress racial inequality during apartheid. Moyo argued that Old Mutual had a director on NMT’s board, who raised no objections to the declaration of the dividends.
‘Hard to repair’
“From the outside, the relationship looks hard to repair,” said Bradley Preston, the head of listed investments at Mergence Investment Managers in Cape Town, which owns Old Mutual stock. “There needs to be certainty that there’s a good working relationship between the board and the CEO.”
Moyo also accuses Manuel — who helped oversee SA’s longest period of economic growth as finance minister until 2009 — of spearheading the campaign against him because he questioned the Manuel’s independence. Old Mutual said Moyo’s claims are “ludicrous” and that Manuel had removed himself from discussions related to his role at Rothschild & Co’s SA unit, an adviser to the insurer.
“My main concern for Old Mutual is increased reputational damage” if Moyo’s second application is successful, said Warwick Bam, head of research at Avior Capital Markets, which has an outperform rating on the stock. “While Old Mutual’s day-to-day operations are unaffected by a change in CEO or board, clients’ perception of the firm may change based on these events.”