Axed Old Mutual CEO Peter Moyo returned to work on Wednesday after the court ruled his suspension and subsequent dismissal were unlawful and the JSE listed insurer should pay his legal fees, including the cost of two counsel.
In a ruling read out on behalf of Judge Brian Mashile on Tuesday, in the Gauteng High Court in Johannesburg, Old Mutual has been interdicted from appointing another CEO in Moyo’s place.
He was reinstated temporarily pending Part B of his application, to be set in motion in approximately 60 days from Tuesday. He will argue that the company damaged his reputation and the board of directors should be declared delinquents under the Companies Act.
Moyo was suspended by Old Mutual in May and dismissed in June. The company claimed he had a conflict of interest and had failed to pay out dividends from an investment firm he co-founded to the financial services giant.
Meanwhile the company’s share price on the JSE fell on the day and amid the continued uncertainty. It was trading down by 5.5% to R19.22 at 17:00 on Tuesday.
Old Mutual has since announced that the firm will appeal the ruling, insisting that Moyo was still barred from returning to work.
His lawyer Eric Mabuza told Fin24, however, that he will report for duty as a notice to appeal does not suspend the ruling. The respective legal teams are set to thrash out the impasse at 14:30 today.
Here are some of the key aspects of the judgment as the saga unfolds:
1. Moyo raised concerns in good faith, Manuel ignored them
Judge Brian Mashile wrote that Moyo raised concerns with Old Mutual chairperson Trevor Manuel about apparent conflicts of interest in “good faith and for no personal gain” and Manuel ignored them and failed to act on them. This relates to Manuel chairing both Old Mutual and Rothschild & Co in SA. The financial advisory company provided consultation services to Old Mutual when it delisted from the London Stock Exchange and listed on the JSE in June 2018. Rothschild stood to benefit from the transaction, the judge stated.
2. Moyo didn’t have the power to withhold payment to Old Mutual
The High Court found that NMT Capital, the company Moyo co-founded and has a 25% stake in, paid out R23m to Old Mutual in arrears as an institutional investor. And for the balance that was owed to the company, the plan was to extend the redemption period or repayment date, which the insurer had always agreed to in the past. “[It is] inconceivable that he [Moyo] had the power to effect the declaration of the dividend resulting in the alleged conflict of interest,” the judgment read.
3. No conflict of interest raised
Mobasheer Patel was a director of both Old Mutual and NMT Capital at the time, looking after the two companies’ interests and he is a trained accountant with a good "understanding" of financial issues. He never indicated there was a conflict of interest between Moyo and Old Mutual in paying out the dividends and he attended an NMT meeting in 2018 where there was a discussion of how the payments should be distributed, according to Judge Mashile’s ruling.
4. Employment contract incorrectly applied
Judge Mashile found that Old Mutual invoked clauses of their contract with Moyo incorrectly. Moyo was appointed as CEO in June 2017 until age 61, approximately four and a half years away. The contract states in Clause 25.1 that if there are allegations of misconduct or incapacity, Old Mutual would be allowed to decide whether to hold an internal disciplinary inquiry to proceed to pre-dismissal arbitration as provided for in Section 188 of the Labour Relations Act. At the same time Clause 24.1 allows either party to give six months notice for a termination of the contract and no-fault needs to be proven as “a simple incompatibility would suffice”.
The High Court went on to say that Moyo’s contract stated that any conflicts of interest related to Moyo’s position at NMT would be dealt with under clause 25.2 and/or by the chairperson of the company. This clause states that disputes which would normally be referred to the Commission for Conciliation, Mediation and Arbitration (CCMA) may be referred to a private dispute resolution. Mashile found it “nonsensical” and "disingenuous” that Old Mutual alleged Moyo was guilty of a conflict of interest but instead of following the procedure outlined in his contract, invoked the clause which stated there was a breakdown in trust between the parties.
5. Irreparable harm
Moyo will no doubt suffer “irreparable harm if the court does not grant the interim relief that he seeks,” Judge Mashile’s ruling read. “The Applicant’s reputation being a high profile employee continues to suffer as a result of suspension and subsequent dismissal without a hearing.” Judge Mashile further dismissed Old Mutual’s argument that the company would suffer if Moyo returned to the helm due to the breakdown in relations between him and the board. “If either party does not work to promote the interest of the respondents, it will be immediately obvious,” the ruling stated