Old Mutual strongly denies untrue assertions made in last week’s City Press about the ongoing case with its former CEO

12 Aug 2019
Two articles which appeared side by side on Page 2 of last week’s Business Section of City Press entitled “Sunlight will reveal the cracks in governance” by Tebogo Khaas and “Moyo and Manuel drama casts a shadow over Cyril’s backers” by Muzi Kuzwayo unfairly attacked Old Mutual, without giving the company an opportunity to respond.

Apart from casting aspersions on the reputation of the entire executive and Board and, in particular, embarking on full-on personal attack on the integrity of Chairman Trevor Manuel, the articles displayed an overt partisan bias and clear misunderstanding of the facts.

The ongoing court processes are certainly thrusting corporate governance into the spotlight, but certainly not the way the two writers see it. Far from Mr Moyo being the hero of this piece, Old Mutual has made it very clear in both its appeal papers and last week’s recent declaratory application, that there has been an irreparable breakdown in trust and confidence, and that any future working relationship with Mr Moyo is untenable, notably due to Mr Moyo’s insistence on instituting further court action to declare Board members delinquent.

The writers, however, neglect the corporate reality that a CEO is accountable to the Board of a company and the Board is elected by its shareholders. Once the Board has lost confidence in a CEO, it’s the end of the road. Unfortunately, they then proceed to make judgment calls before even a judge has decided on two crucial outstanding processes. Only a judge can with any finality decide and no one yet knows what the final outcome will be, especially when it comes to the so-called Part B of Mr Moyo’s action. In our view the filing of our application for leave to appeal has, in the meantime, suspended the original order.

Putting the personal prejudices of the writers aside, it seems to be totally forgotten amid the noise that Peter Moyo was never the only Executive in a leadership position who will be held to the high standards Old Mutual expects.

This is very much a story about good corporate governance – and it highlights that achieving good governance is not easy. With much of corporate SA and the SOE’s in a quandary over governance standards, Old Mutual has been willing to make the hard decisions to ensure good governance is placed at the forefront of everything it does.

If anyone is willing to look beyond the noise, at the heart of this matter remains the actions of Mr Moyo which led to the termination of his contract of employment. It remains untenable that a CEO would not view declaration of ordinary dividends by his private company in contravention of the terms of the preference share subscription agreement resulting in him personally benefiting to the detriment of his employer as a conflict of interest.

We have in our court papers also dispelled any notions there was a “triple conflict” by Mr Manuel or that Old Mutual paid his legal fees. It is made clear Old Mutual has only managed and paid for two individual litigation cases involving the Board Chair where it was decided that it was in Old Mutual’s interest to do so. These related to two very specific instances in which Mr Manuel’s position as Old Mutual Limited Chairman and Old Mutual plc Board member was compromised. Any other litigation by the Chairman, such as the recent case against the EFF, his appearance at the Zondo Commission and the various actions against him by the Public Protector, are for his own account. Mr Moyo not only gave the original instruction to OM legal to act in 2017 he also approved the processing and payment of the legal fees from time to time as they related to Old Mutual, but yet appears to be using misdirection about “legal fees” to move attention away from his own actions and his failure to manage conflicts of interest as required by his employment contract, which led to the breakdown in trust and confidence and ultimately the termination of his employment contract with Old Mutual.

We also make it clear in the court papers the Board Chair’s relationship with Rothschild pre-existed his joining any Old Mutual Board, and the Rothschild mandate to advise Old Mutual plc on the managed separation process similarly predated the Board Chair joining the Old Mutual plc Board. This relationship was also fully disclosed in the OML Pre-Listing Statement (PLS) on page 223 and the PLS was signed by all the directors of OML, including Mr Moyo, who warranted that no false or misleading statements were made in the PLS.

There is little doubt that Old Mutual’s actions throughout show in clear, unequivocal terms the high premium it places on strong corporate governance. It forms the foundation of a culture that supports customer, investor and employee confidence.

It is unfortunate the writers in the above articles failed to see this situation for what it is and they fail to applaud good governance standards when they see it, especially in light of the devastating challenges SA Inc. is faced with today. It is time to move SA forward together, with the highest possible ethical and governance standards providing the guiding light every step of the way.