Business Maverick

Business Maverick

Moyo to go after Old Mutual directors in their personal capacity

Moyo to go after Old Mutual directors in their personal capacity
Axed Old Mutual CEO Peter Moyo and Old Mutual chairman Trevor Manuel. (Photos: Freddy Mavunda / Business Day) | EPA / Laurent Gilleron)

Axed Old Mutual CEO Peter Moyo wants to censure the conduct of Old Mutual board members, including chairman Trevor Manuel, by charging them individually with contempt of court. If found guilty, the directors could be imprisoned – with chilling implications for corporate SA.

The gripping boardroom battle between Old Mutual and its fired-but-reinstated CEO Peter Moyo might make corporate history in South Africa. The four-month-long dispute playing out in the Johannesburg High Court has moved from a spat involving Old Mutual, its 13-member board and Moyo, to a corporate conflagration with very serious implications for errant company directors throughout the country.

This dramatic possibility was brought into sharp focus as Moyo outmanoeuvred Old Mutual again in court on Monday 23 September – and ensured he would be dragged into further costly litigation against the insurer to get his job back. Moyo was fired by the Old Mutual board on 18 June over a breakdown in trust and an alleged conflict of interest, prompting him to sue for unfair dismissal.

(Read more here: Moyo-mess.)

Moyo now wants to censure the conduct of Old Mutual board members, including chairman Trevor Manuel, by charging them individually for contempt of court. The contempt of court charge relates to being disobedient or disrespectful towards a court of law regarding its orders or overall authority. If found guilty, the offence comes with sanctions that include hefty fines or imprisonment for a period determined by the court.

Moyo believes Old Mutual board members are in contempt because they twice blocked him from returning to his office after the High Court ordered on 30 July that he be temporarily reinstated as CEO because he was not afforded a disciplinary hearing. On Monday 23 September, Judge Brian Mashile ordered that Old Mutual’s 13 board members and the company itself be joined in Moyo’s contempt of court application.

This means Manuel and his colleagues will have to convince the court, through affidavits over the next 10 days and a High Court hearing over the next 30 days, that they should not face hefty fines or imprisonment.

Moyo is pushing for them to be imprisoned for six months or a period determined by the court. Judge Mashile said the possible imprisonment of Old Mutual board members was so serious that he saw it fit to join them into Moyo’s contempt of court proceedings to allow them to defend themselves. “In the result, where one seeks an order holding a company criminally liable, the directors or some senior employees must be joined to the application because a company being a legal persona that derives its existence from a statute cannot be imprisoned,” read Mashile’s 16-page order.

As such, it was not only critical but also imperative for the applicant (Moyo) to join the non-directors to the application if he had hoped to find the first respondent criminally liable with possible imprisonment flowing therefrom.”

Mashile also allowed Moyo to admit a second letter that he was issued by Old Mutual on 21 August, terminating his employment contract, into evidence as part of his contempt of court proceedings. Read the letter here: Moyo-battle. Old Mutual spokesperson Tabby Tsengiwe said board members will oppose Moyo’s contempt of court application and will comply with timeframes provided by Mashile.

It would be unprecedented if Old Mutual board members were found guilty of contempt of court and jailed for it. In many circumstances, courts in South Africa have made adverse findings against companies at a broad level instead of holding individual board members and non-executive directors personally liable for decisions they have taken on behalf of a company and shareholders.

The sanctions that Moyo is asking the court to impose on the board members have the potential to put the blame squarely on them for bad decisions at a time when shareholders and the public are seeking recompense or justice for governance scandals at the likes of Steinhoff, Tongaat-Hulett, KPMG and many others. BM


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