Relationship with Moyo ‘destroyed'
• Insurer’s directors say CEO was fired a second time to fulfil their fiduciary responsibility to the company
Old Mutual says its directors were not acting irresponsibly when they decided to terminate ousted CEO Peter Moyo ’ s employment contract for a second time. In papers filed in the high court in Pretoria on Tuesday by Old Mutual’s head of legal services, Craig Mcleod, the company describes how the relationship between the company and its erstwhile CEO was “completely destroyed” in the wake of the initial dismissal and the litigation Moyo launched to challenge it.
Old Mutual says its directors were not acting irresponsibly when they decided to terminate ousted CEO Peter Moyo’s employment contract for a second time.
In papers filed in the high court in Pretoria on Tuesday by Old Mutual’s head of legal services, Craig Mcleod, the company describes how the relationship between the company and its erstwhile CEO was “completely destroyed” in the wake of the initial dismissal and the litigation Moyo launched to challenge it.
“It was also a step taken for reasons that were different and separate from those that led to the first notice of termination,” said Mcleod.
Moyo and Old Mutual initially parted ways over the way in which a conflict of interest had purportedly been handled by the former CEO.
The dispute involves the payment of dividends by a company called NMT Capital in which Moyo is a director and shareholder, and in which Old Mutual invested by way of preference shares.
Old Mutual maintains that it should have been paid preference dividends before an ordinary dividend was declared and paid by NMT in 2018.
Moyo attributes the development to miscommunication and administrative errors. Following his initial dismissal on June 17, the former CEO launched an application to have the dismissal declared unlawful.
In a decision handed down on July 30 in the high court in Johannesburg, Judge Brian Mashile agreed with Moyo and set aside the dismissal and temporarily reinstated him as CEO.
Old Mutual has appealed against the decision and the matter is awaiting court action.
Moyo attempted to return to work and was subsequently prevented three times from accessing the executive suite at Old Mutual’s office in Sandton, despite not being “required nor requested” to appear by his former employer.
On August 21, Old Mutual served Moyo with a second letter of dismissal, and in the argument presented on Tuesday, the company says this was done by the directors in order to fulfil their fiduciary responsibility to the company as required by law.
Moyo’s lawyers replied with an application to have the company be found in contempt of court.
“The directors had reached the conclusion, in the course of the litigation that ensued following the giving of the first notice of termination, that irrespective of the outcome of that litigation a continued employment relationship with Mr Moyo had become untenable,” states Mcleod.
As opposed to showing contempt for the decision of the court to temporarily reinstate Moyo, Old Mutual argues it was only because of the decision of Judge Mashile that it had the power to terminate Moyo once again, just for different reasons.
As for allowing him to resume his duties, the judgement was not clear on what the reinstatement actually required. In any event, it could simply not be required to allocate the duties of CEO to Moyo while the company is entangled in a range of litigation with him.
As part of the terms of the dismissal, Old Mutual has paid Moyo his salary and accrued benefits until the end of December.
Since Moyo was first dismissed in June, Old Mutual’s share price has declined by 8.46% marginally outperforming its peers in the FTSE/JSE Africa Life Insurance index over the period.
The share price closed at R19.79 yesterday.
IT WAS A STEP TAKEN FOR REASONS THAT WERE DIFFERENT AND SEPARATE FROM THOSE THAT LED TO THE FIRST NOTICE OF TERMINATION