Shares in Old Mutual fell on Tuesday after a high court judge ruled that the company’s suspension and subsequent dismissal of CEO Peter Moyo earlier this year was unlawful and that he must be temporarily reinstated.
The judge also blocked South Africa’s No.2 insurer, which suspended Moyo in May and fired him in June following a disagreement over an alleged conflict of interest, from taking any steps to replace the CEO while a fuller case against his dismissal was heard.
Old Mutual shares were down more than 5% at 3.40pm.
“The … suspension and subsequent dismissal were unlawful,” Judge Brian Mashile’s judgment, which was read out by another judge, said.
Moyo punched the air in celebration on hearing the ruling.
The saga over Moyo’s dismissal has proved a reputational headache for one of South Africa’s oldest companies, and one that could prove costly if Moyo’s broader case is successful.
An Old Mutual spokesperson said the company was studying the judgment and will decide on a course of action.
Moyo wants to be permanently reinstated or receive unspecified damages from the insurer, as well as see its board members declared delinquent.
In court papers, he has accused Old Mutual Chairman Trevor Manuel and other members of the board of their own governance breaches.
He argues his effort to raise concerns about this were the real reason for his suspension and dismissal, with Manuel on a campaign to turn other board members against him.
An answering affidavit filed on behalf of Old Mutual said Moyo’s account of events had no factual basis, it had not breached any part of its contract with the former CEO and that there were no grounds for his reinstatement.
The affidavit said the insurer was also considering whether to claw back any part of the R35.5 million already paid to Moyo as part of his remuneration.
He is currently set to be paid another R4 million in fixed pay for his six-month notice period.
Old Mutual was accused of investigating Moyo behind his back before serving him with a notice of suspension less than 24 hours before its annual general meeting (AGM).
Speaking to City Press hours after the company announced that it would be parting ways with him, Moyo said he found out “accidentally” that he was under investigation, adding that he had not been officially informed about this, nor was he given a report related to the probe.
“I thought they were looking at particular transactions. I did not know they were investigating me. I found out on April 30 by accident,” said Moyo.
He said he had only seen snippets of opinions, which Old Mutual had written about, expressing concern about a conflict of interest regarding Moyo.
Moyo said that although he was aware of the opposing views between him and the board over certain issues, he thought his axing was “most inappropriate” and the statement announcing the matter “badly written”.
“I have done absolutely nothing wrong,” he said.
Asked if he saw the end of his tenure at Old Mutual coming, Moyo said he preferred to reserve his response.
The board stated that it had decided to part ways with Moyo because of “a material breakdown of trust and confidence, which occurred due to the management of conflicts of interest in business relations with related parties” that existed before his appointment to Old Mutual.
The company further said the disclosed conflicts were considered to be manageable and were contractually regulated.
Moyo, one of the financial services sector’s most high-profile leaders, presided over Old Mutual’s return to South Africa, after almost two decades of having its primary listing in London. He was steering it to becoming a Pan-African company.
The news of his departure came as a shock to the market as he had been delivering solid results and executing the company’s vision.
Responding to questions about their parting of ways, Old Mutual said Moyo was not fired but rather “suspended pending discussions on separation”.
“The decision follows ongoing engagements between Peter and the board about competing interests regulated in the chief executive’s contract of employment, which were disclosed in the Old Mutual Limited prelisting statement and the annual financial statements. Unfortunately, the board and Mr Moyo have disagreed materially on how the conflict of interest has been managed, resulting in a breakdown in the required mutual trust and confidence.”
Moyo is a founder and former CEO of investment holding company NMT Capital, which he declared when he joined Old Mutual.
Old Mutual denied that the matter arose from Moyo’s transparency relating to his role in NMT Capital. The company is the only institutional investor providing R277 million in preference share funding and R14 million in ordinary share funding. – Reuters