Old Mutual rattled shareholders on Friday by suspending CEO Peter Moyo, who has been in the job for less than two years.
The company did not disclose specifics, but said it was not the result of poor performance or financial misconduct related to the Old Mutual business.
After the announcement of Moyo's suspension, the life insurer's share price fell nearly 5% in early trading, but later narrowed losses to end the day 3.2% weaker at R21.
Chair (and former finance minister) Trevor Manuel said the company's board had decided to "separate" from Moyo as "a result of a material breakdown of trust and confidence, which occurred due to the management of conflicts of interest in business relations with related parties".
Moyo has held various directorships in SA over the years, including Liberty Group, Vodacom and Transnet, and is the founder and former CEO of NMT Capital, an investment holding company established in 2002. Old Mutual is an investor in NMT.
The life insurer, SA's second-largest by market value, was sparse on detail, but Manuel did tell shareholders at the company's AGM that the conflicts of interest had become "unmanageable and untenable".
In a statement on Friday, he said: "These business relations pre-exist the appointment of Mr Moyo as CEO of [Old Mutual] and were considered at the time of the appointment to be manageable."
Moyo did not respond to a request for comment. But he told Bloomberg he had done nothing wrong and his links with NMT were above board.
He was demanding a "complete" payout deal before he even considered accepting an exit offer, he said.
Asked whether NMT was the company in question, Manuel told Business Times that Moyo had some "pre-existing interests in a private investment company which has some overlapping interests with Old Mutual".
NMT, which has investments in construction, energy, financial services, information technology and manufacturing, states on its website that Old Mutual is its only institutional investor.
Old Mutual had provided preference share funding of R277m and R14m in ordinary share funding to NMT, Warwick Bam, head of research at Avior Capital Markets, said in a note.
Old Mutual's response was too short and too sharp, said Bam, adding that "the lack of transparency around it is bad for the share".
He sees the lack of detail from the board at the AGM as a missed opportunity.
"It was certainly unexpected," said Hannes van den Berg, Investec Asset Management co-head of SA Equity and Multi-Asset.
"But we respect the way the board handled the matter," he said.
Old Mutual last year returned its primary listing to the JSE after two decades in London. It was part of an extensive restructuring that also saw the company lower its stake in Nedbank and unbundle its US asset management and UK wealth management interests.
One of the matters flagged in its pre-listing statement was Moyo's interests in NMT Capital.Over and above the equity and preference share funding Old Mutual provided to NMT, it also granted preference share funding to a family trust of Moyo's, according to the pre-listing statement.Moyo did not receive any remuneration as a nonexecutive director of NMT Capital, the company said at the time.But even though the conflicts were regulated in Moyo's contracts, he and Old Mutual did not see eye to eye on how to handle it even with "ongoing engagements".Moyo was the deputy MD of Old Mutual SA from 2000 to 2005 and thereafter had a stint as CEO of Alexander Forbes.Old Mutual has appointed Iain Williamson, a company veteran who most recently served as COO, as acting CEO.strydomt@sundaytimes.co.za..