Insurer must see Peter Moyo fight through
Old Mutual has no choice but to see the battle with former CEO Peter Moyo play out to the very last. There might be a temptation to settle things quietly, behind closed doors, and hope the whole thing blows over and is forgotten about by year-end.
Certainly some shareholders, weary of the insurance giant making headlines for all the wrong reasons, would like to see that happen. However, this option is complicated by the fact that any payment to Moyo would have to be made public due to disclosure requirements.
Rightly or wrongly, the approximately 20% slump in the share price, since the dramatic announcement in May that Moyo had been suspended, has been attributed entirely to the ungainly public spat.
Old Mutual hasn’t played a very strategic game, though it’s impossible to know how hard the board tried to resolve it before breaking cover.
Equally, there have been blunders on Moyo’s side. And now his NMT Capital partners seem to believe the public will ignore the Industrial Development Corporation (IDC) elephant in the room, this after Old Mutual painted it bright red.
Whether the Old Mutual share price weakness is permanent will depend entirely on how this story ends rather than how it’s played.
The group’s history in the past two decades has been about inappropriate generosity being heaped on poorly performing senior executives; shareholders and policyholders have been left with slim, if any, pickings. The Moyo saga should not represent a continuation of this unacceptable tradition.
XENOPHOBIC VIOLENCE
SA authorities need to act speedily to quell geopolitical tensions caused by the spate of xenophobic violence that erupted in Gauteng a few days ago and is now affecting JSE-listed companies.
In a somewhat expected twist, people in countries such as Nigeria and Zambia have turned on SA-based businesses in retaliation for xenophobic attacks in Gauteng.
But are some SA firms operating in these countries really as affected as they appear?
MTN and MultiChoice have shut some branches outside SA. Though unlike Shoprite, or most recently Pick n Pay, who have lost physical stock and products through looting, DStv’s service has not been cut and MTN subscribers are still able to communicate on the network.
The lights are still on, revenues have not halted.
Tensions among different nationalities have been bubbling for a number of years, though the effect on large corporate entities has tended to be minimal at best.
The authorities should act to assure the safety of fellow Africans in SA.
The game has changed: people have found a way to retaliate without having to set foot in SA.
This round of violence may just be the start.
SA-owned supermarkets have been attacked. An escalation may cause banks such as FNB and Standard Bank, which both have a large presence on the continent, or Massmart, which has a presence in Zambia, being targeted next. Over time, mobile operators and pay-TV companies may experience a real effect on their bottom lines if cellphone towers or satellite dish sites are vandalised, resulting in services going offline.