Financial services giant Old Mutual is now free to look for a new boss after the high court in Johannesburg ruled in its favour against its twice-fired chief executive, Peter Moyo.
Old Mutual spokesperson Tabby Tsengiwe said Tuesday’s judgment confirmed that company had acted lawfully when it terminated Moyo’s contract.
Old Mutual’s share price rose 3,7% to R19.73 by 11:29am, following the judgment.
“Importantly, it also provides legal clarity on corporate governance and board stewardship, including the relationship between boards and executive leadership. Old Mutual is committed to good governance and the appropriate management of conflicts of interest,” Tsengiwe said.
After Judge Brian Mashile’s recusal from the case in December, a full Bench delivered the verdict on whether Moyo could return to work.
Shortly after Moyo’s firing in June, Mashile ordered that Old Mutual temporarily reinstate him pending Part B of his application, in which he asked the company’s directors be declared delinquent.
Speaking outside the court after Tuesday’s ruling, Moyo said it was highly likely that he would appeal. “There are things in the judgment that create grounds for an appeal. There’s a good chance that we will appeal. If we appeal this, the status quo [following Mashile’s ruling] remains.”
Part B of Moyo’s application is pending. Moyo’s lawyer, Eric Mabuza, said the latest judgment had no bearing on his client’s application.
Reading the judgment on behalf of the Bench, Judge Pieter Meyer said Moyo will pay the full costs of Old Mutual’s legal fees.
The six-month battle has negatively affected investment sentiment, wiping 17% of its value since Moyo was suspended in May last year.
“The irreparable harm which Old Mutual — one of the oldest and largest companies in our country with more than 30 000 employees — its shareholders, employees and other stakeholders stand to suffer if the interim interdict is allowed to stand, requires no imagination or elucidation,” Meyer read.
“The reality of the order is that Old Mutual is forced to live with its adverse effects as long as the main action is pending or remains inconclusive. It is forced to be governed by a chief executive and a board to whom the chief executive is supposed to report and obliged to maintain its ongoing trust and confidence.”
Moyo and Old Mutual have been in a protracted battle since the JSE-listed company fired him — first in June and again in August — citing a breakdown of trust and conflict of interest related to a payout of dividends by NMT Capital, an investment firm co-founded and partly owned by Moyo.
Old Mutual has accused Moyo of unlawfully pocketing R31-million in NMT dividends. Old Mutual, which has a 20% stake in NMT, claimed in court papers that the ordinary dividends were declared and paid to Moyo without sufficiently providing for and servicing Old Mutual’s preference shares as required, something which Moyo disputes.