Is Manuel truly independent?
JOB RENAMED: APPOINTMENT AS CHAIR MAY BE CONFLICT
Reclassification from nonexecutive director to independent nonexecutive director a murky issue.
and has initiated proceedings to have Manuel and the board declared delinquent directors. He said he was fired after he accused Manuel of being conflicted.
The cloud around Manuel’s ability to act independently comes from his association with the Rothschild Group, which was one of Old Mutual’s advisors when it went through its unbundling.
Once-off R5.2bn advisory bill
It is unclear how much business Rothschild does with the insurer, but Old Mutual’s 2017 annual report said the once-off advisory costs associated with its unbundling were at least £100 million, or R5.29 billion in today’s currency.
Manuel became a member of the international advisory board of the Rothschild Group and deputy chair of Rothschild SA in October 2014. He recused himself from all meetings and decisions at Rothschild relating to Old Mutual. Even so, being involved with both Old Mutual and Rothschild seemingly contravenes Prudential Authority regulations , which state that only independent nonexecutive directors can be made chairpersons.
Criteria
According to the Prudential Standard Governance and Operational Standards For Insurers, one of the criteria for an independent director is that the person may not “have any business or other relationship (contractual or statutory), which could be seen by an objective outsider to interfere materially with the individual’s capacity to act in an independent manner”.
The murkiness of the issue has been compounded by Old Mutual shifting Manuel’s description from nonexecutive to independent nonexecutive. When he joined in January 2016, he was a nonexecutive director and his relationship with the Rothschild Group was inferred to be that of a related party in subsequent annual reports. But in the 2018 annual report, his title changed, without explanation, to independent nonexecutive director.
No comment
The Prudential Authority, which is housed in the SA Reserve Bank (Sarb), would only say: “The Sarb, as a regulator, does not comment on individual institutions.”
However, it pointed out that the Prudential Standards on governance of insurers only became effective on July 1 last year. Even taking this into account, when Manuel was appointed as chairperson of OMEM (which later become Old Mutual) in March 2017, the move seemingly contravened the Governance and Risk Management Framework for Insurers.