Shareholders lose out as Moyo vs Old Mutual drags on

There’s a clear loser in the no-holds-barred war between the Old Mutual board and its twice-fired chief executive, Peter Moyo: the shareholders who have watched the share price fall by 17% — erasing more than R16-billion from its market capitalisation — as the gloves have come off.

Independent analyst Theo Botha says that neither Moyo or Old Mutual has come out as the clear winner so far and that shareholders have borne the brunt of the dispute.

“Normally if there is a dispute in a company like this then the CEO [chief executive] will leave. This case has caught the shareholders off guard,” he says.

A corporate governance expert and lecturer at the Gordon Institute of Business Science, Morris Mthombeni, says that it is still possible that the dispute can be resolved but neither side has indicated any likelihood of this.

“The way each side is playing this out suggests that it’s near impossible for them to actually repair their relationship.
What is clear is that both sides should have worked a lot harder to arrive at a situation to avoid finding themselves in a litigation,” he says.

The dispute between Moyo and the Old Mutual board began shortly after Moyo was suspended in May and dismissed in June, due to a “conflict of interest” and a “material breakdown in trust and confidence”.

Moyo went to court to fight his dismissal, which he said occurred without disciplinary proceedings.

Part B of his application wants the board declared delinquent.

Moyo came out victorious on July 30 when Judge Brian Mashile in the Johannesburg high court ordered that he be temporarily reinstated pending his other application.

The company nevertheless barred him from returning to work and launched an appeal to the ruling, which was heard by the same judge earlier this month. The judgment was expected to be handed down at the end of August but Moyo has now requested that the court hold back until the outcome of his application is heard in September.

In the latest affidavit, filed on Monday, Moyo wants the courts to find that the Trevor Manuel-led board of directors have deliberately interfered with the functioning of the courts because his contract was terminated by the company for a second time last week.

Moyo has also lambasted Old Mutual for rejecting the settlement proposal he sent to the company on August 5. In the correspondence sent to Old Mutual, seen by the Mail & Guardian, Moyo says that the proposal to bring forward his application to have the company’s directors declared delinquent while he is placed on voluntary special leave, with full benefits, is a bid to “break the current impasse and to avoid unnecessary prolonged litigation and in the interest of all stakeholders.

“During that period, the parties would apply their best endeavours to reach a settlement in respect of all outstanding issues between them,” the proposal reads.

To counter the proposal, Old Mutual placed two options on the table: firstly for both parties to agree to suspend the court ruling which ordered Moyo’s temporary reinstatement; and secondly that the company withdraw its appeal to the initial court ruling.

Commentator and chartered accountant, Khaya Sithole says that both parties should have considered the long-term consequences of airing their “laundry” in the public domain.

“What makes this unique is that both parties are of the view that they have a reasonable chance of succeeding in a litigation process, therefore they are persisting with it.”

If they really applied their minds, he says, they might consider that the consequences of losing are just too great.

Thando Maeko is and Adamela Trust business reporter at the Mail & Guardian