By Fifi Peters, CNBC Africa anchor and reporter
In a surprising turn of events, Old Mutual has again terminated the employment of Peter Moyo as CEO, saying it was in the best interests of the company and its shareholders for the relationship to come to an end. This was revealed in an open letter to shareholders.
Speaking on CNBC Africa’s Power Lunch show, Old Mutual’s Head of Communications Tabby Tsengiwe said “the decision was taken to provide clarity and certainty for the market.”
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Startled by the announcement, Moyo’s attorney, Eric Mabuza of Mabuza Attorneys questioned which contract the financial services firm was terminating as the termination of the previous contract was found unlawful by the High Court last month.
In the open letter to shareholders Old Mutual said it was responding to mounting pressure from investors that it address the ongoing litigation in its boardroom, which has coincided with a 17% drop in its share price on the JSE.
The insurer said it had informed Moyo of its decision to further terminate his employment and outlined its reasons for doing so in the open letter:
“This step, as with previous steps taken in relation to Mr Moyo, has been taken after legal advice and on careful reflection by directors, with proper regard to their fiduciary duties to the company.”
But Mabuza described the company’s actions as “corporate madness,” adding that it was clear the directors were protecting their own interests and not those of the company.
“They can’t even wait for the outcome of the court judgment,” said Mabuza.
“Things can’t go on like this. Someone must intervene and save Old Mutual from itself, its directors and itself,” he said.
Last month, the High Court ordered Old Mutual to reinstate Moyo as CEO and blocked the company from finding a new CEO, saying the manner in which it had terminated his contract breached its own disciplinary codes.
Old Mutual, which launched an urgent appeal to challenge the court order, said it disagreed with the court’s decision that it was supposed to give Moyo a disciplinary hearing before firing him.
“We respectfully disagree, both because we do not believe that the contract required this and because we believe that a fair and appropriate process was followed before notice was given,” the the financial services giant said in the open letter.
“It will remain important to finally resolve the dispute about the validity of the June notice of termination. However, irrespective of what might eventually happen in those legal proceedings, events following the June notice have made it clear that a continued employment relationship between Mr Moyo and Old Mutual is untenable,” it added
Old Mutual fired Moyo on June 18 after the board lost trust and confidence in his leadership following his non-disclosure of a conflict of interest related to NMT Capital, the investment firm co-founded by Moyo in which Old Mutual owns a 20% stake.
The board accused Moyo of not acting in the best interests of the company by chairing an NMT meeting and overseeing the declaration and payment of dividends to shareholders, including himself, when NMT still had preference share debt owed to Old Mutual.
Moyo has maintained that his firing was related to whistleblowing on board chair, Trevor Manuel’s triple conflict of interest during the managed separation from London parent, Old Mutual Plc as well as the non-disclosure to shareholders that the company footed Manuel’s legal bills.
In the open letter, the company addressed the contentions matters relating to the board chair.
“Old Mutual wanted to ensure that all steps taken in the litigation were aligned with protecting its business objectives together with its brand and reputation,” it said, explaining why the payment of Manuel’s legal fees were not disclosed to shareholders.
“The Board Chair’s relationship with Rothschild and Old Mutual Plc were known and were disclosed and managed as required by United Kingdom and South African laws and regulations and corporate governance best practice.”
The High Court’s decision on Old Mutual’s application for leave to appeal, clarity on whether Moyo can return to work before the appeal is heard as well as Moyo’s counter application for the company and directors to be found in contempt of court, is expected next Friday, August 30.
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