So the South African whodunnit saga of Peter Moyo versus the board of insurance giant Old Mutual continues to play out as I’ve opined about here before. In what is becoming one of Africa’s most spectacular corporate governance case studies, the embattled CEO Peter Moyo was fired from his job in May 2019 as the board cited major conflict of interest concerns that had emerged.
Moyo responded by accusing the board chairman of his own conflict of interest issues and thereafter the cookie crumbled with accusations and counter accusations. At the end, Moyo went to court and, on July 30, 2019, was reinstated as the CEO by Judge Brian Mashile.
As expected, Moyo was barred from entering his offices much to his chagrin, and Old Mutual were happy to continue with business as usual since they had appointed an acting CEO upon Moyo’s firing. Between July 30 and now, both sides have dug in their heels on their position, with Moyo’s lawyer shouting loudly to anyone who is listening that the board are, and continue to be, in contempt of court.
In particular, the appointment of an acting CEO was viewed by the lawyer as a direct infringement of the court order to reinstate Moyo.
This is a very interesting argument as anyone in the corporate world knows an organisation cannot operate without a head, even if in an acting capacity, since stakeholders such as shareholders, regulators and employees need to see an accountable officer in place as this is where the managerial buck stops.
After a prolonged silence, which gave Moyo and his lawyers the leeway to take control of the public narrative on the story, the board spoke out.
The chairman, former finance minister Trevor Manuel, held a televised media interview mid-September 2019 and went to great lengths to articulate the circumstances giving rise to Moyo’s malfeasance which led to his firing. As with all such stories, the underlying issue is what Moyo wants to be paid. At the point of his May dismissal, the board directed that he be paid four million rand (Rwf245 million) in lieu of six months’ notice.
However Moyo’s court filings indicate that he is claiming 230 million rand (Rwf14.5billion) for alleged breach of contract and a further 20 million rand (Rwf1.3 billion) for harm to his dignity, esteem and self-worth as Old Mutual had falsely portrayed him as unethical and dishonest, he said.
After a noticeable hit on the share price since the spat became public, shareholders have now come out in public to voice their concerns and call for reason.
The state-owned Public Investment Corporation, which is Africa’s largest asset manager with over 2.1 trillion rand (Sh 14 trillion) under management, is the largest investor in Old Mutual and has requested the board to resolve the matter out of court.
Other institutional investors with significant shareholding have also weighed in, split between getting an out-of-court settlement and going the distance with the court process. The key issue for those going for the court process is that the eye-watering settlement Moyo is asking for is particularly excessive in a society like South Africa’s that has large social inequalities.
Moyo’s take-no-prisoners-stance comes from the fact that his reputation is shot and this is his last opportunity for a payout that should cushion him through his early forced retirement.
The chairman has also come under fire for his blustering description of Judge Mashile’s reinstatement order. “If you take a board imbued with the responsibility and accountability and you get that overturned by a single individual who happens to wear a robe, I think you have a bit of a difficulty,” was his description of the ruling.
He subsequently came under fire for what Moyo’s lawyers have said was an insult on the entire judiciary who also wear robes. Manuel subsequently apologised and withdrew the statement.
Board fights bring out the ugly side of human nature, particularly when protagonists fight in the public media glare. There are, and can be, no winners in this case despite whatever court outcomes emerge.
What is certain is that board director relationships will be strained, investors will get jittery, regulators will apply pressure for resolution and employees will be destabilised by the fight for power. Meanwhile corporate governance educators will continue to scratch their heads and ask: what could the board have done differently to prevent this messy outcome?