What has played out in public over the past few months has been one of the fiercest and most unseemly corporate battles seen in SA; and one that’s seriously eroded Old Mutual’s share value
On a typically chilly winter night in June last year, the Old Mutual leadership hosted an emotive homecoming celebration at their ultramodern new headquarters in the heart of Sandton’s financial district.
Situated across from the Gautrain station, a stroll to the Nelson Mandela Square/Sandton City complex and a brisk walk to the JSE, the location is the perfect setting for a company that sits slap bang in the middle of the South African economy.
After almost a decade of being headquartered in London and having a primary listing on the London Stock Exchange, one of the continent’s biggest corporations and the financial fulcrum of many of the continent’s economies was now going to be driven from the precinct they call Africa’s richest square mile.
Writing in last year’s integrated report, then chief executive Peter Moyo described the first year back as a “truly momentous” one for the group.
To show it was still marching in step at that point, group chairperson Trevor Manuel used the same language, describing the June 26 listing day as a “truly momentous occasion that marked the physical homecoming of a company deeply rooted in Africa”.
It’s a battle so ugly that the building has been defiled by embarrassing scenes of the chief executive being prevented from entering the premises and finding himself ejected by security guards
Fast forward to this year and the swanky building is the site of a momentous battle between Moyo and his board.
It’s a battle so ugly that the building has been defiled by embarrassing scenes of the chief executive being prevented from entering the premises and finding himself ejected by security guards who used to nod respectfully whenever he walked in.
Moyo has cleverly played the victim card, portraying himself as the target of a mega-bully in Manuel, who has compelled Old Mutual’s entire board to succumb to his views.
In the toxic political environment, this has proved to be very deft as he has given ammunition to those who hate President Cyril Ramaphosa, who has a long-standing relationship with Manuel, to locate this fight in the country’s bigger battles.
It has helped galvanise sympathy from black professionals and executives who feel as though they are treated as outsiders in the corporate world.
This despite the fact that the Old Mutual board is largely black.
The Old Mutual board has tried hard to resist this strategy of driving a wedge between itself and its chairperson.
So much so that Manuel was reluctant to come out as the face of the board to defend the corporation as it took a beating from the market and continued taking reputational damage from the public brawl.
When Manuel eventually did speak out, he sullied things by taking a jibe at the judge who had ordered Moyo’s reinstatement.
Lost in the cacophony is the original sin, Moyo’s active involvement in NMT Capital, a company he co-founded and in which Old Mutual had invested
His subsequent apology counted for little as he had already lowered himself to Floyd Shivambu levels.
Lost in the cacophony is the original sin, Moyo’s active involvement in NMT Capital, a company he co-founded and in which Old Mutual had invested.
While Moyo insists everything was declared and above board, and that he spends as little time at NMT as he can, his influential role in that company’s decisions – particularly the controversial disbursement of dividends – was bound to raise conflict issues down the line.
There was a point where, in line with the spirit and paper of good governance, he should have made a call on whether he trusted his partners well enough to drive the asset from a distance while he steered South Africa’s eighth-biggest corporation.
And even if he didn’t fully distance himself from the running of NMT, the onus to recuse himself from key meetings was pivotal.
For the record, Moyo holds a 30% stake in NMT and Old Mutual holds 20%, meaning he straddles a tenuous line between his two responsibilities.
Old Mutual share price (March to September this year)
From various accounts, this 2017 marriage between Moyo and Old Mutual was not one that was going to end well.
In Moyo, Old Mutual acquired a top-rate corporate executive with a strong track record and a sterling reputation.
He was the perfect guy to oversee the managed separation, as the process around the JSE listing and unbundling of assets was called.
But it also acquired a hard-headed (some say extremely arrogant) individual who has always believed his employers needed him more than he needed them.
The early signs of the rocky relationship to come was evident early during the contractual negotiations when the terms of conditions of employment were being ironed out.
According to those in the know, even the nature and extent of his lodgings while on business in Cape Town – where the chief executive is often required to spend a few days a week – was the subject of some contention.
That aside, he proved to be an exceptional chief executive, driving the transition and, at the same time, delivering good results.
This is a point that the board acknowledged even as it suspended and then axed him in June.
When Moyo was engaged by a small board subcommittee, with a delegation to deal with the NMT matter, the meetings were heated, with Moyo standing his ground and the board insisting that because of his “significant” conflict of interest he had failed to discharge his fiduciary duties.
By the time he was called into a full meeting of non-executive directors in mid-June to be told of the investigation into the NMT matter, only the naive would have believed he was going to roll over.
What has played out in the past few months has been one of the fiercest and most unseemly corporate battles seen in South Africa
He and the other executive directors had been excluded from that meeting as it was dealing directly with him and his potential conflict of interest.
After a testy exchange, it was clear that a war was on.
What has played out in the past few months has been one of the fiercest and most unseemly corporate battles seen in South Africa.
It has severely eroded Old Mutual’s share value, and drawn in heavyweight institutional investors who have been vainly urging the parties to come to an amicable solution.
After several bruising court battles and a digging in by both parties, that solution is looking like a mirage.
While Old Mutual says Moyo is no longer an employee, the latter insists he is still the chief executive and has even demanded access to the executive perks of office.
And while Old Mutual says it has deposited the R4 million due to him at the end of his employ in June, it has been whispered to the company that Moyo is said to be wanting to make it cough up a lot more to make the nightmare go away.
Word on Johannesburg’s streets is that the number is humungous, dwarfing the R35.5 million he earned last year.
How, then, does this movie end?
It appears the final arbiter will be the appetite of the major shareholders who, at some point, will no longer be able to handle the erosion of their value.
For now, they are willing to stand by Old Mutual, fearing setting a bad precedent if they allow a chief executive who feels indispensable to browbeat a blue-chip company into submission.
Soon, though, they will have to call time and let the credits roll.