PIC urges ‘solution’ to Moyo, Old Mutual row

Biggest shareholder speaks up after its investment loses value

● Bury the hatchet as soon as possible. That’s what the Public Investment Corp (PIC) wants Old Mutual and former CEO Peter Moyo to do because it’s concerned about the destruction of shareholder value brought about by the legal spat.

The PIC, which manages civil servants’ pensions and is the largest shareholder in the life insurer, according to Bloomberg data, has until now stayed on the sidelines.

“The PIC has separately engaged and continues to engage both parties to register its concerns and urge them to find a solution,” Deon Botha, the PIC’s head of corporate affairs, told Business Times this week.

Moyo is suing Old Mutual and its directors for R250m in a combination of contractual and delictual claims that include foregone salaries, incentives and bonuses, as well as harm he allegedly suffered to his dignity, esteem and selfworth. Old Mutual said the summons, issued this week, was an attempt by Moyo to further enrich himself at the expense of shareholders and policyholders.

The life insurer’s share price has fallen about 10% since it suspended Moyo nearly five months ago, citing a breakdown in trust and confidence in his handling of conflicts of interest. The drop meant that the PIC, which holds a stake of 11%, saw its investment lose about R1bn in value.

“A delay in resolving this dispute will escalate the destruction of shareholder value,” Botha added.

A few weeks after suspending Moyo, the life insurer terminated his employment. But Moyo challenged this in the South Gauteng High Court, won and was temporarily reinstated, only to be denied access to the building and again dismissed by Old Mutual.

Moyo has stuck to the legal route, and wants Old Mutual to be held in contempt of court. Old Mutual is due to file papers on this matter on Tuesday.

And the life insurer is not impressed by Moyo’s multimillion-rand claim. The company told Business Times on Friday: “Mr Moyo attempting to further enrich himself to the tune of R250m from shareholders and policyholders is consistent with his behaviour of putting his personal self-interest ahead of Old Mutual.”

At the heart of the dispute is Moyo’s investment in NMT Capital and NMT Group, companies he founded, still holds a stake in and in which Old Mutual is also a shareholder. The life insurer said in Moyo’s initial letter of dismissal that he had chaired an NMT board meeting where dividends were declared to himself and other ordinary shareholders while Old Mutual’s preference share dividends were still in arrears. Pref shares are supposed to be in line before ordinary shares when sharing in a company’s profits.

Moyo has claimed that his dismissal had been a reprisal for making disclosures about what he called a “triple conflict of interest” on the part of board chair Trevor Manuel and Old Mutual stumping for some legal fees on behalf of Manuel.

Manuel and Old Mutual have denied any wrongdoing. Old Mutual is appealing the judgment that reinstated Moyo.

“This thing can be in court for a long time,” Moyo told Business Times on Friday.

He said he had engaged with five Old Mutual shareholders, all holding sizeable stakes. “They want a speedy resolution to this.”

Old Mutual said it was committed to resolving the matter speedily.

“We are balancing the needs of our broad shareholder base in determining the right steps to resolve this, and will continue to engage with our shareholders,” the company said.

But this seems more likely to have the legal battles run their course than to find a settlement out of court.

Moyo and his lawyer, Eric Mabuza, confirmed on Friday that there had not been any approaches from Old Mutual related to possibly settling the matter out of court.

‘A delay will escalate the destruction of shareholder value’