The corporate saga of 2019 is not over; there are at least two big court dates for Old Mutual before the end of year.
The insurance giant will argue in court that an employer is entitled to terminate an employment contract, when it appeals a judgment interdicting it from firing former CEO Peter Moyo.
But ahead of that appeal, which may only be heard in December, Moyo will be in court next month. He will argue that Old Mutual is in contempt of court for refusing him entry to work after Judge Brian Mashile reinstated him in July. He was fired for a second time in August – making this a corporate soap opera such as SA has not seen.
Old Mutual has been granted leave to appeal against Mashile’s ruling, with the Gauteng High Court sitting as a full bench and likely to be led by Judge President Dunstan Mlambo. The company will argue that Judge Mashile erred in several areas of law, the most important being on a company’s right to terminate.
“…the Court failed to deal with, and effectively ignored, all the relevant authorities on the entitlement of an employer to terminate a contract of employment on notice, and that the termination is lawful for the reason that it is authorised by the clause permitting terminations on notice and does not constitute repudiation”. In other words, Old Mutual will argue that Moyo signed his contract which provided for summary termination on notice pay - which is what happened.
Old Mutual will argue that this contract “…does not require the applicants to provide just cause or a fair reason for termination. There is, therefore, no contractual requirement to follow a fair process to provide just cause or a fair reason for termination”. A clause like this is obviously counter-factual to the values underpinning South Africa’s labour laws, but the company argues that this is standard practice in how CEOs are employed - which is why they earn the big money.
Moyo earned an average of R3m a month at Old Mutual - before bonuses. At issue is the fact that he also cashed in dividends from NMT Capital, the investment holding company he co-owns with well-known businessmen Sango Ntsaluba and Thabiso Tlelai. In the period in contention, the Old Mutual court papers reveal that Moyo also received R30.6m in dividends from NMT Capital and may also have received R20.9m allocated in July 2018.
These payments are at the centre of his axing, as the company says Moyo should have ensured that Old Mutual receive dividends first – before he was paid. Old Mutual is a preferential shareholder in NMT. It’s a messy conflict and Old Mutual contends that Judge Mashile glossed over it.
For his part, the judge, in interdicting Moyo’s termination of employment, said Old Mutual should have looked at how Transnet fired its acting CEO Siyabonga Gama, who was first subject to hearings and disciplinary procedures.
But Old Mutual says Gama’s contract stipulated that termination was subject to following a pre-dismissal procedure while Moyo’s contract only required six months’ notice. “What is clear from Gama is that termination for loss of confidence and trust on notice is lawful in accordance with the provisions of a clause permitting termination on notice.”
Old Mutual will also argue that Judge Mashile made an error in deeming the case to be urgent and it will argue that Moyo’s claim that he was fired after making a protected disclosure (another word for whistle-blowing) is not true. “…the Court merely paid attention to the issue of the chronology of events and ignored completely the evidence presented by the applicants that the alleged disclosures formed no part of the deliberations and decisions leading to the termination of the employment contract…the Court completely overlooked the onus upon the first respondent to prove that the alleged disclosure fell within the definition of a protected disclosure under the PDA (Protected Disclosures Act) and satisfied all the elements of the PDA, even on a prima facie basis,” the insurer argues.
Old Mutual has previously told the court that it raised questions on how Moyo had distributed NMT dividends long before the meeting where he is alleged to have raised the fact that board chairperson Trevor Manuel was conflicted.
Old Mutual will also argue that the court left the company in limbo as it cannot hire a new CEO until all the legal issues are resolved and this could take a “… number of years to finalise”.
Meanwhile, settlement talks are ongoing and Moyo has tabled an opening demand of R250m to cover a pay-out on the rest of his contract and which also includes an R20m damages claim for loss of reputation. Moyo has not yet filed his answering affidavit to the Old Mutual appeal.
Regardless of whether the case is settled out of court, Old Mutual wants the appeal hearing to go ahead as it judges the issues at hand to be materially important.