Fired Old Mutual boss heads to court
Peter Moyo plans to launch a lawsuit against his former employer Old Mutual after he was fired as the CEO of the insurer over an alleged conflict of interest, his lawyer said yesterday, according to a Business Day report.
Eric Mabuza’s statement came hours after Old Mutual said it had sacked Moyo, who had been on suspension over the past three weeks when allegations of conflict of interest surfaced. Mabuza reportedly said Old Mutual’s statement was incomplete at best and misleading at worst.
‘More importantly no financial or other prejudice was suffered by Old Mutual as a result of any action on the part of Mr Moyo.’
‘Mr Moyo will therefore challenge Old Mutual’s conduct in court, where we trust the truth will be ventilated.’
The report notes Moyo was suspended in late May over a disagreement as to how the company should engage with investment firm NMT Capital, which he founded.
Old Mutual Life Assurance Company, a subsidiary of Old Mutual, is an investor in NMT Capital.
The breakdown between Moyo and Old Mutual makes his departure difficult and potentially costly as SA’s second-largest insurer could be ordered to make a payout to its former CEO if he wins his case, says a Moneyweb report. Old Mutual said Moyo’s actions since his suspension had contravened his fiduciary duties to Old Mutual, his employment contract and his notice of suspension, and that it had terminated his employment following unsuccessful attempts to engage with him.
The dispute relates to dividend payments made by NMT Capital, where he was a non-executive director and in which an Old Mutual subsidiary is the only institutional investor.
Moyo’s interest in NMT Capital was disclosed upon his employment and protocols put in place to manage the relationship.
However, Old Mutual said yesterday two dividend payments made by the firm in 2018, totalling R115m ($7.8 m), were a breach of its rights as a preference shareholder because ‘arrear preference dividends’ were unpaid at the time and preference share capital was redeemable at the time of the second payment.
Moyo chaired the board meeting of NMT Capital where the second ordinary dividend was declared, and that the benefit to Moyo and his personal investment company of the payments was R30.6m, it added.
The axing of Moyo has sparked investor concerns that the insurer might use shareholder funds to pay him an exit package that runs into millions of rands. A group of pension funds with a collective shareholding in Old Mutual of less than 1% want the company’s board – led by chairperson Trevor Manuel – to engage with shareholders and put any possible exit package for Moyo through a vote.
A second Moneyweb report points out that if Old Mutual accedes to the pension fund demands, it would be a rare move as there are no rules in SA that give shareholders the right to reject a golden handshake granted by a board to an outgoing CEO.
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