A bruising, six-month long public battle between Old Mutual and its former CEO, Peter Moyo, which has wiped off 17% of the group's share price and caused shareholders to lose billions of rands, is headed to court again on Wednesday.
This time, the country's second-largest life insurer is hoping to get an earlier high court judgement - ordering it to reinstate Moyo - thrown out.
Old Mutual Board director, Paul Baloyi, said on Tuesday that the appeal is important for clarity. "We believe that the logical consequence of the interim order [to reinstate Moyo in July] would be an upending of company law and corporate governance," he told Fin24.
The appeal, which Old Mutual filed immediately after Johannesburg High Court Judge Brian Mashile ruled in July that Moyo must be reinstated because he was fired illegally, will be heard on Wednesday.
There are now a handful of sub-court challenges, ranging from contempt of court charges to applications to declare Old Mutual directors delinquent, and a request for the judge who has been preceding over the case to recuse himself. These twists and turns have made it difficult for to keep tabs on what’s happening.
So where did it all begin and how did the two parties get here?
22 May 2019
Old Mutual announced the suspension of Moyo. In a statement published on the Stock Exchange News Service, the insurer said he was suspended because of the way he managed – or rather failed to manage – "conflicts of interest in business relations with related parties".
It later turned out that the related party was NTM Capital, a private equity boutique that Moyo founded years before he rejoined Old Mutual in 2017, where he was appointed CEO-in-waiting.
Old Mutual held a 20% stake in NMT Capital and had provided preference capital to the company in its early years. The conflict of interest was NMT Capital’s decision to declare and pay two sets of ordinary dividends in 2018 without paying preference capital or preference dividends that were due to Old Mutual.
Company law dictates that dividends to preference shareholders should be paid before those due to ordinary shareholders. Old Mutual later received its preference dividends, but after months of delay.
Old Mutual announced that it had fired Moyo. The insurer said he failed to provide an acceptable explanation on the issue of dividend payments and there was “a material breakdown in trust and confidence in Mr Moyo”. The company appointed its then-chief operating officer, Iain Williamson, as acting CEO. Moyo’s lawyer, Eric Mabuza, who also happens to represent axed South Africa Revenue Services commissioner, Tom Moyane, immediately announced that Moyo would challenge his dismissal.
Moyo filed papers in the Johannesburg High Court demanding he be temporarily reinstated and that the court forbid the appointment of a new CEO. He also wanted all 14 directors of the Old Mutual board declared delinquent.
The showdown between the parties began at the Johannesburg High Court. Moyo’s legal team argued that he was being persecuted for raising concerns around Old Mutual chair Trevor Manuel’s alleged conflict of interest. Manuel, for his part, said Moyo sat on both the boards of Old Mutual and Rothschild & Co, an international advisory firm that was contracted to counsel the insurer on its managed separation process that was completed in 2018.
Old Mutual, meanwhile, defended Manuel and made it clear that whether the court ruled in its or Moyo’s favour, it did not want him back.
30 July – August
Judge Brian Mashile ruled that Old Mutual must temporarily reinstate Moyo because it did not afford him a disciplinary hearing. Old Mutual then filed appeal documents and barred Moyo from returning as CEO. Moyo’s lawyer, meanwhile, filed contempt of court charges against Old Mutual.
Old Mutual then served Moyo with a second notice to terminate his employment, while appealing the court’s ruling.
09 September – 30 September
Judge Mashile granted Old Mutual leave to appeal against his July ruling, in which he ordered the company to reinstate Moyo. He, however insisted that the insurer must reinstate Moyo in the meantime.
Old Mutual held a press conference in which Manuel stated that Judge Mashile’s July ruling was “bad in law” and the board felt strongly that “it must be prosecuted” because it would create a “massive headache” for corporate governance.
Pinky Moholi, one of the 14 Old Mutual directors who fired CEO Peter Moyo, resigned with immediate effect.
Peter Moyo sued Old Mutual for R250m for reputational damage and what he would have earned throughout his term. The insurer promised to vigorously defend that claim.
Moyo asked the court to only consider jail terms for Old Mutual directors that fired him, after filing five more contempt of court charges against them.
Old Mutual, meanwhile, got an expedited date for its appeal and asked Judge Mashile to recuse himself from the contempt of court case, saying he was now “an affected party”. This stemmed from Moyo’s legal team's decision to add a contempt of court charge, saying Manuel had insulted the judge through his utterances in the September media briefing. In that event, Manuel said a board’s decision could not be overruled by “a single individual who happens to wear a robe”.
Mashile has not announced his decision on the recusal application.
Wednesday, December 3, 2019
On Wednesday, Old Mutual is expected to argue that it was within its rights to terminate Moyo’s contract without first holding a disciplinary hearing. It will also likely argue that the second axing of Moyo in August followed required legal procedures.
Meanwhile, Mabuza has said while he does not want to pre-empt what will happen on Wednesday, Moyo’s legal team will vigorously oppose the appeal.