Ex-Old Mutual CEO Peter Moyo heads to court on Tuesday to challenge his dismissal by the financial giant.
The legal wrangle centres around the blue-chip company's dismissal of its former chief executive, with Moyo mounting a challenge against Old Mutual over his dismissal in June over what the company called "a breakdown in trust and confidence". Old Mutual had initially suspended him on May 23.
In the urgent two-part application, Moyo has also asked the court to grant him an interdict preventing Old Mutual from appointing his replacement and declare his suspension and dismissal unlawful and unconstitutional.
Part B of the application, intended to be set in motion within 60 days of the outcome of Part A, would see him lodge a damages claim. He also wants the 17-member board to be declared "delinquent directors".
1. NMT Capital dividend payment and 'conflict of interest'
NMT is a company co-funded by Moyo in 2002 and Old Mutual Life Assurance Company, a subsidiary of Old Mutual, is an investor in NMT Capital. Moyo has a 25% stake in NMT. Moyo declared the relationship when Moyo was appointed CEO of Old Mutual Emerging Markets in 2017.
However, Old Mutual has taken issue with the 2018 payment of a total of R115m ordinary dividend in March and July 2018 by NMT. The payment was done while preferential share dividends to Old Mutual were in arrears, according to the company.
Old Mutual alleges that as Moyo was paid a share of R30.6m, as part of the payout, this in breach of Old Mutual’s rights as preference shareholder.
In his affidavit, Moyo says Old Mutual was eventually paid the preferential dividend in October 2018.
2. Why the NMT dividend matters
The ordinary dividend of R115m was declared without evidence of proper solvency and liquidity analysis, according to Old Mutual. The company had a R157m debt with Industrial Development Corporation (IDC).
Old Mutual states that the IDC debt wasn’t disclosed in a board pack for an NMT board meeting on 4 July 2018, and that the company was in a unsatisfactory financial position.
It says the dividend was declared "without evidence that a proper solvency and liquidity analysis was conducted...which materially affected its solvency analysis." During this period, Old Mutual preference share dividends were in arrears.
3. Termination of employment contract
The 56-year-old is aggrieved that his suspension and ultimate dismissal was without a hearing.
He says at his level and status of employment, the mere suggestion that he was found guilty of conflict of interest "was instantly damaging to my reputation and good name in the business word and society in general".
On the other hand, Old Mutual says there is no legal or factual basis that his termination of employment was in breach of contract, noting that Moyo has elected not to pursue the matter under the provisions of the Labour Relations Act.
4. A fair chance - or not
Moyo accused Old Mutual chair Trevor Manuel of spearheading his dismissal, but the the company maintains that his suspension was due to a breakdown in the relationship between himself and the board, and that Moyo is portraying himself as "the victim of adverse publicity".
It says Moyo is welcome to bring a claim against the company, but contends that the board tried unsuccessfully to engage him to "secure an agreed separation" that could be announced publicly, with his consent.
Moyo states that he objected to the payment of legal fees by Old Mutual in a litigation case involving Manuel. Old Mutual is rejecting the claim, say he "supported the legal expenses and gave the required instructions".
In its response, the company rejects the claim as "disingenuous attempt to deflect attention from the matters that led to the termination of his employment".
6. Manuel's conflict of interest in Old Mutual Managed Separation
Manuel’s involvement with Rothschild, the company that advised Old Mutual on the Managed Separation process, is listed by Moyo as one of the issues he flagged as conflict interest on the part of the chair.
Old Mutual rejects claims of potential conflict, saying the relationship between Rothschild existed before he became board chairman and was disclosed.
"The suggestion that this issue had anything to do with the decision to terminate the Applicant’s employment is quite simply ludicrous."
Chief among Moyo's grievances are victimisation claims which are mainly attributed to Manuel. He says his relationship with the chair deteriorated after he raised the issue of his potential conflict of interest in the Managed Separation.
He said from that point, Manuel's attitude towards him deteriorated, "followed by other relative smaller incidents of pettiness in the ensuing months".
Moyo further states that Manuel "grossly mishandled" the issue of breach of protocol in the NMT saga, which came to his attention towards the end of April 2019.