Axed Old Mutual CEO Peter Moyo is fighting back
Peter Moyo, who was axed as Old Mutual CEO on Tuesday, is not going quietly.
Initially suspended three weeks ago with the insurer citing a conflict of interest due to his involvement with a financial services company that he helped found in the early 2000s, Moyo vowed to clear his name in court after Old Mutual accused him of wrongly pocketing more than R30m in dividends from NMT Capital.
Moyo is the "M" in NMT, and the other initials belong to Sango Ntsaluba, the executive chair, and Thabiso Tlelai, a hotel and property executive who is also the CEO of the Don Group.
Moyo was CEO at NMT when he was initially recruited as the CEO of Old Mutual Emerging Markets in 2017, which has raised questions among some analysts as to when the relationship became problematic for Old Mutual.
Old Mutual said when it first suspended Moyo that the CEO had done nothing wrong or dishonest, and praised his performance.
The standoff has since turned decidedly ugly, with the insurer announcing on Tuesday that it intended to terminate the relationship with the CEO, accusing him of potentially breaking company law in the process. He vehemently rejected this and said all transactions were done in the open with Old Mutual’s awareness.
Old Mutual said NMT Capital, a diversified investment firm in which it holds a 20% stake, had declared two sets of ordinary dividends valued at R115m during its 2018 financial year without paying preference capital or preference dividends that were due to it.
NMT was initially supposed to repay the preferential capital invested by Old Mutual in July 2010, but the two parties agreed to roll it over a couple of times. Moyo said NMT started talks with Old Mutual to roll it over again in 2018.
According to the Companies Act, dividends to preference shareholders should be paid before those due to ordinary shareholders. Old Mutual said in the case of NMT Capital, preference payments due to it for the first round of dividends declared in 2018 were not paid by the time Moyo's investment company declared a second ordinary dividend.
Moyo called the allegations "incomplete at best and misleading at worst". He said the insurer had received R23m in ordinary dividends and an additional R20m in preference dividends. "At all times, Old Mutual had a separate director on the NMT board. Importantly, he voted for all these dividends. It is therefore difficult to understand any conflict when Old Mutual was party to these decisions through this director's representation," said Moyo in a statement issued through his lawyer.
In its 2018 financial statements, Old Mutual also lists R23m of ordinary dividends from NMT and R24m in preference dividends from NMT Capital and NMT Group. But it does not state whether these were paid.
NMT Capital on Tuesday issued a statement saying preference share dividends due to Old Mutual were "duly paid" but there was a slight delay in the payment and it was negotiating an extension of the date of payment with the insurer.
Old Mutual, on the other hand, said it found out about these dividend declarations only in the latter half of 2018 when its board committee tasked with monitoring related-party transactions was reviewing Moyo's activities to see if he was still adhering to his employment contract. The insurer said that it was not satisfied with Moyo's explanation.
"The board has not been provided with an acceptable explanation why, in clear contravention of the relevant preference share agreement with Old Mutual as well as Mr Moyo's employment obligations, ordinary dividends were declared whilst debt to Old Mutual was outstanding," said Old Mutual in a statement published on Sens.
When Old Mutual suspended Moyo, chair Trevor Manuel said that there was no financial misconduct.
"We must be careful never to create a straw story that he did something wrong. We never said he did something wrong. Doing something wrong and a breakdown in trust are not the same thing," he said at the time.
Whether there was contravention of the preference share agreement or even the Companies Act on NMT Capital's side would depend on how the agreement between the two parties was structured, said Warwick Bam, head of research at Avior Capital Markets.
Old Mutual shares lost 0.3% on Tuesday, valuing the company at R104.4bn. Since its listing on the JSE in June 2018, shortly after Moyo's appointment as CEO, the share has shed 26%, although this is largely due to repricing to reflect the Nedbank unbundling.
Moyo was paid R50m in the 2018 financial year, including a bonus for managing the separation of Old Mutual’s businesses into four, including the sale of London operations.