Separation stress
Moyo rubbishes the board’s claim that preference dividends were not paid or that debt to Old Mutual is outstanding
is what this jumps to if the microplastics
Old Mutual has fired its CEO, Peter Moyo, weeks after first announcing his suspension over a conflict of interest. And it has finally given some detail about its side of the story.
Moyo is a nonexecutive director and shareholder in NMT Capital, the BEE firm he founded as Amabubesi. This potential conflict of interest was declared, and the board of Old Mutual initially tolerated it. Old Mutual approved remuneration of more than R50m for Moyo last year.
The first signs of a breakdown in the relationship between Moyo and the board were evident in the latter half of 2018, when its snappily named related-party transaction committee (RPTC) said concerns had emerged about Moyo’s conduct in relation to his interest in NMT. The key concern was about two declarations of ordinary dividends by NMT Capital during 2018 totalling R115m.
Moyo’s share was R30.6m.
Old Mutual’s announcement is “rubbish”, Moyo tells the FM. “All dividends due to Old Mutual from NMT have been paid,” he says, promising a more detailed response once he has consulted his lawyers.
Moyo has previously said he played no role in NMT’S management decisions, including when and whether to pay dividends.
But Old Mutual says these dividends were declared in breach of its own rights as preference shareholder.
“Arrear preference dividends were unpaid at the time, and, [when] the second dividend declaration [was made] the preference share capital was redeemable,” it says in a statement.
The preference share capital remains unpaid, Old Mutual says.
It is not the first time a BEE holding company has deferred a preference share dividend.
Old Mutual says Moyo chaired the board meeting of NMT Capital at which the second ordinary dividend of R105m was declared.
These matters were investigated and reported to the RPTC in February 2019. The RPTC reported to the overlapping Old Mutual corporate governance and nomination committee in March.
NMT Capital then engaged in friendly discussions with the RPTC and rather less friendly ones with Old Mutual’s lawyers, and Moyo was subjected to another round of discussions to get more information. The RPTC also interviewed Moyo personally, in an effort to secure information that was relevant to these events.
The corporate governance committee considered these matters at meetings during April and the full board deliberated on them at two meetings during May.
The Old Mutual board believes it has not been provided with an acceptable explanation for the reason ordinary dividends in NMT Capital were paid in contravention of the preference share agreement with Old Mutual as well as Moyo’s employment obligations.
One would think debt to Old Mutual would take preference over rewards to the founders and builders of NMT.
The longest discussion of the issue took place at the May 23 board meeting, and that was when the board decided that there was a material breakdown in trust and confidence in Moyo.
Moyo refused to agree to a separation and he was suspended. The board believes Moyo’s actions since the suspension — including his interview with the FM in May — contravened his fiduciary duties to Old Mutual.
Avior Capital head of research Warwick Bam says the facts surrounding Moyo’s termination are “deeply concerning and cast a deeper shadow on leadership and governance” in SA.
“While we can applaud the
Old Mutual board for reacting to the situation, we have to question the board’s initial tolerance for accepting a material conflict of interest.”