Board and CEO separation is a painful divorce

A few weeks ago in June, I drew your attention to the board room shenanigans taking place down in the wintry Highveld where Johannesburg lies. The insurance giant Old Mutual had gotten itself in a bit of a governance pickle when the CEO, Peter Moyo, was fired on accusations of conflict of interest. As he bust out of Dodge, he strode past the ground floor swinging doors humming verses of “See You In Court”. The online business newspaper Fin24 provides great coverage over the story and I’ve relied on a number of its posts to piece together what happened. Mr Moyo had his day in court last Tuesday, July 30, not even two months from the date he was sent home by the board.

Having certified the matter as urgent, the court was regaled with both sides of the story. On Mr Moyo’s side, he claimed in his affidavits that the rain started beating him when he called out the board chair’s own conflict of interest back in March 2018.

Trevor Manuel, former Minister of Finance and current board chair of Old Mutual, was allegedly approached by Mr Moyo and informed that he was conflicted in what was a complex transaction involving the delisting of Old Mutual PLC from the London Stock Exchange, the listing of Old Mutual Limited onto the Johannesburg Stock Exchange and a company called Rothschild & Co. Ltd which was one of the transaction advisors.

Mr Manuel was a director in Old Mutual PLC and the chairperson of the South African listed Old Mutual Limited as well as Rothschild &Co. In Mr Moyo’s view, this created a triple conflict of interest particularly since Rothschild stood to make millions in fees, which it did.

Mr Moyo was clearly taking no prisoners because he went on, a year later in February 2019, to tell his chairman that he was going to tell the board, via the Corporate Governance and Nominations Committee chaired by Mr Manuel, that there had been an “improper non-disclosure of a payment amounting to millions of rand, which was paid by Old Mutual in respect of the chairman’s legal fees for his much publicised legal battle relating to the Guptas and their associates.”

The committee resolved not to disclose the expenditure, which upset Mr Moyo as he felt it was compulsory to do so as it amounted to a form of remuneration in the hands of Mr Manuel and should be disclosed to shareholders.

Quite understandably, the rain beating on Mr Moyo’s head became hailstones: “It would be an understatement to say that after that episode and as a result thereof, all hell broke loose and Mr Manuel treated me with open hostility.”

Anyway, back to last Tuesday. As soon as the court ordered Mr Moyo’s reinstatement as CEO, he was quite circumspect as he spoke to reporters waiting outside the courtroom: “I’m back in the office tomorrow morning at 08:00. The most important thing is that we have to go back and rebuild Old Mutual.”

Two people could not have been happy with that judgement. The first was obviously the chairman, who had probably breathed a sigh of relief as Mr Moyo’s Italian leather shoes hit the pavement outside Old Mutual HQ upon his firing. The second must have been the company secretary who filed an affidavit on behalf of the company during the case for reinstatement saying,

“In seeking the extraordinary relief that he does, the applicant’s inflated sense of self-importance is astonishing.” Well, that statement won’t age well if Mr Moyo gets back into the CEO’s office and they have to meet over at the communal water cooler. Mr Moyo’s law suit was in two parts. Part A sought his reinstatement as CEO. Then 60 days after conclusion of the reinstatement claim, he was going to launch Part B which would seek a damages as well as ask the court to declare the 17-member board of the insurer as “delinquent directors.” No one was going to be spared from Mr Moyo’s retaliatory scythe.

By the time of writing this, Old Mutual’s lawyers went to court on Wednesday morning to file an appeal, while Mr Moyo rocked up in his best blue suit to work, ready to rock and roll. But the Old Mutual lawyers claimed that the appeal notice essentially set aside the judgement and he could not assume office.

In what is clearly Africa’s most exciting high stakes corporate governance drama to date, we wait with bated breath to see how this will end up.

But what is abundantly clear is that the two protagonists in this case namely a chairman and a CEO are fighting on a platform of mutual accusations of conflict of interest. Whatever the outcome of the court case, board rooms should always be alive to the potential minefield this delicate issue can lead to.