Old Mutual’s CEO was suspended because of his side business – here’s what we now know

Business Insider SA
Peter Moyo, former CEO of Old Mutual.
  • Old Mutual suspended its CEO, Peter Moyo, on Friday morning.
  • The board and Moyo clashed over his interest in an investment holding company.
  • Moyo’s previous stint as a CEO also ended with a fight.
  • For more, go to Business Insider SA

In the 15 minutes following the announcement that its CEO was suspended, almost R5 billion was wiped off Old Mutual’s value on Friday morning.

Investors were spooked by a cryptic announcement that CEO Peter Moyo had been suspended due to a “material breakdown in trust and confidence between him and the Board”, with one professional investor telling Business Insider that it evoked "fears of a Steinhoff reprisal". 

This was somewhat assuaged when the company later issued another statement, revealing that the suspension was due to a fight over Moyo’s business interests.

“These business relations pre-exist the appointment of Mr Moyo as CEO of Old Mutual and were considered at the time of the appointment to be manageable.

“Unfortunately the Board and Mr Moyo have disagreed materially on how the conflict of interest has been managed, resulting in a breakdown in the required mutual trust and confidence.”

Moyo, chairperson of the South African organisation Business Against Crime, told Reuters there was “absolutely no wrongdoing on my part”.

Here’s what we now know:

Moyo refused to budge on his interests in a company called NMT Capital

He started NMT with Sanogo Ntsaluba and Thabiso Tlelai. Ntsaluba co-founded the auditing firm SizweNtsalubaGobodo in 1992, and Tlelai is the founder of the Don Suite Hotels Group.  Company records also list Bulelani Ngcuka, former national director of public prosecutions, as a previous director of the company.

Old Mutual holds a 20% stake in NMT. Since 2004, Old Mutual invested almost R300 million in various NMT companies, and also provided "preference share funding" to Moyo’s family trust. 

NMT Capital held stakes in various companies, including Basil Read (which went bust last year), employee benefits consultants Amabubesi, Zimbabwean insurance group WFDR, oil and petroleum group Falconmere and the large American multinational DXC Technology.

Bloomberg reported that in 2016, Moyo tried to buy a stake in Vodacom for NMT, while he was chairperson of the cellphone group. He negotiated with Old Mutual to buy a part of their shares,  but the deal was unsuccessful.

Moyo received R3.8 million in pay from NMT in 2017, according to Old Mutual’s pre-listing statement. He stepped down from an executive position later that year when he became Old Mutual’s CEO, but remained a non-executive director.

While Old Mutual said that Moyo didn’t receive any pay for his work as director at NMT, it’s clear from Friday’s statement that he remained more involved in the business than they may have liked.

Moyo’s previous stint as a CEO also ended with a fight

In 2005, Moyo resigned as CEO of  Alexander Forbes following a "difference of opinion" between him and the board. Moyo was appointed three years earlier to help save the company. Alexander Forbes had to pay hundreds of millions of rands after it was found guilty of secretly pocketing money owned by retirement funds.

At the time, Fin24 reported that Moyo was unhappy because his executive powers were being undermined.

Zimbabwean-born Moyo, a chartered accountant, previously was a partner at Ernst & Young. 

Moyo earned more than R50 million in the past financial year

His total remuneration for the past year was R50.57 million – which included R15.4 million for helping to unbundle Old Mutual. The company separately listed its stake in Nedbank, and sold off other interests.

In its remuneration report, Old Mutual said Moyo achieved five of six medium-term targets, “including approximately R750 million of recurring costs of the R1 billion target saved in 2018”.

Curiously, earlier this week, Old Mutual released “additional information” about how the reward for the successful unbundling was calculated.

This was probably because shareholders were asking for more details, says shareholder activist Theo Botha of Proxy View.

The road ahead

One analyst told Business Insider SA that he was not perturbed to see Moyo go, as “this may be a good thing for the company in the long run”.

On Friday, the company posted a subdued trading update for the three months to end-March, which showed that investment inflows are falling. While recovering from the initial 6% fall, the share price faltered after the negative update:

Old Mutual's share price on Friday. Source: Sharen
Old Mutual's share price on Friday. Source: Sharenet

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