Moyo may need better weapon

In the 1987 film The Untouchables, Sean Connery’s character remarks nonchalantly, after shooting dead a knife-wielding assailant: “He brought a knife to a gunfight.” Peter Moyo, the former CEO of Old Mutual, might not have seen the movie. But right now, just hours before he and Old Mutual are due to slug it out in the high court in Johannesburg, it looks as though he is equipped with little more than the equivalent of a penknife.

Of course, it could be that come Tuesday Moyo will unveil a nuclear-type response to the devastating counter-allegations contained in Old Mutual’s court papers. It is difficult to imagine what such a response would include, but presumably it would be critically damaging not only for chair Trevor Manuel, who is the focus of Moyo’s ire, but also Old Mutual. And, also presumably, it would see the private equity company co-founded by Moyo, NMT Capital, emerge as a canny investor.

But as things stand, and they never stand for long in a legal battle, it is possible that the fight Moyo instigated will deal a crippling blow to his reputation, to his business prospects and to the business prospects of NMT. Old Mutual’s court papers, responding to allegations that Manuel was “triple conflicted” and a bully, paint a picture of an ineptly managed NMT that presumed Old Mutual would always be at hand to roll over a preference share arrangement or sign off on a subordination agreement.

The memorandum of agreement of subordination, which was delivered by NMT to Old Mutual for signing off in April 2019, is staggering in its audacity. NMT wanted Old Mutual to suspend R277m of claims it had against the investment company for an indefinite period. While this may have been an annual occurrence, needed to accommodate a year-end audit period, the fact that it was delivered at the height of a hugely sensitive investigation into a potential conflict of interest suggests NMT was desperate or that, come what may, it regarded Old Mutual as an easy touch.

There is also the disturbing matter of the unsigned minutes of the July 2018 meeting at which the highly controversial decision to pay a R115m dividend was taken. Those minutes, according to Old Mutual, were only signed off nine months later in April 2019.

And then there’s Moyo’s claims that Old Mutual had scored generous returns on the R150m placed with NMT’s fund managers for a fee. The implication being that a powerful institution was benefiting hugely from BEE. It’s unclear whether Moyo was knowingly trying to confuse the matter or did not realise this R150m was quite separate from Old Mutual’s investment in NMT. Either way it does not reflect well on Moyo.

The picture painted by Old Mutual’s court papers is so damning that shareholders must be wondering who the headhunters were and what sort of selection process delivered Moyo to one of the top positions in corporate SA.

Perhaps the most important message to come from the 352 pages of court documents is that conflicts of interest cannot be managed, and therefore must be avoided. This legal battle, however damaging it might be to Old Mutual in the short run, should be regarded as a warning gift to corporate SA.

Investors in listed companies are constantly told that apparent conflicts of interest are effectively managed by the board; that the directors or executives recuse themselves when conflicted matters come up for discussion. That always sounded like so much baloney. We now have 352 pages of proof.

No amount of board structures and oversight arrangements are adequate to deal with the overwhelming sense of entitlement of a CEO or chair. One can only speculate what a chair less robust than Manuel might have tolerated.

But while commendably robust, Manuel’s actions are not entirely blemish-free; his relationship with Rothschild should not have had to be accommodated.

PERHAPS THE MOST IMPORTANT MESSAGE IS THAT CONFLICTS OF INTEREST CANNOT BE MANAGED