Members of the board of directors of Old Mutual Insurance may be handed prison sentences for refusing to obey a court order to temporarily reinstate its former chief executive, Peter Moyo.
Moyo was not allowed to resume his duties as CEO despite court orders given by the South Gauteng High Court, Johannesburg, in September. He was fired back in June in relation to a conflict of interest and break down of trust between him and the board.
The South African-based insurer accused Moyo of receiving a payment of R30 million from a company called NMT Capital. The company maintained the payment should have been made directly to Old Mutual. NMT Capital is an investment holding company that was established by Mr. Peter Moyo in 2002. The company has an Old Mutual subsidiary as its only institutional investor.
Old Mutual has made a plea to the South Gauteng High Court, classifying the impending imprisonment of board members – if found guilty of contempt of court – as “inappropriately harsh punishment and certainly not warranted.”
In September, Business Day reported that the Johannesburg high court had shut down Old Mutual’s attempt to prevent Moyo from returning to work until its appeal process is concluded. “The application is dismissed in its entirety and the applicant is ordered to pay costs,” said Judge Brian Mashile.
Mashile ruled that Moyo’s dismissal in June was illegal because Old Mutual did not afford him a disciplinary hearing after accusing him of gross misconduct before firing him.
The judge also said the insurer failed to follow the terms of Moyo’s employment contract when he was dismissed. He ruled that the CEO should be temporarily reinstated pending part B of his court application.
Rather than obey court order, the insurer barred Moyo from returning to work, opting to appeal the court’s ruling instead. The company also wrote an open letter to shareholders of their unwillingness to take the fired executive back. The letter stated that, “A continued employment relationship between Mr. Moyo and Old Mutual is untenable. For this reason, Old Mutual has now given Mr. Moyo a further notice terminating his employment.”
Moyo’s lawyer, Eric Mabuza, described the open letter as “corporate madness”, and accused Old Mutual directors of protecting themselves rather than the company. Shareholders are currently unhappy with the saga because it has brought a huge decline in the company’s stock, thereby affecting their investments negatively.
Written by Ishioma Emi.