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Old Mutual is pushing for former CEO Peter Moyo to stump up for the legal battle that is due to start this week.
The life insurer has exposure of nearly R400m to NMT Capital, a company founded by Moyo. But Moyo was sacked last month due to his alleged handling of conflicts related to NMT.
Moyo approached the high court two weeks ago demanding to be reinstated and alleging, among other things, that board chair Trevor Manuel had been "gunning" for him.
But in a stinging reply to Moyo's court papers, the life insurer this week said it wants the former executive's application to be dismissed "with an adverse order of costs on a punitive scale".
This could cost the former CEO hundreds of thousands in legal fees as advocates in the high court do not come cheap, a litigation expert told Business Times.
Moyo has an "inflated sense of self-importance" and his application is without merit, Old Mutual's company secretary, Elsabé Kirsten, says in an affidavit filed on Tuesday.
The life insurer pours cold water on Moyo's assertions that he is a whistle-blower about alleged corporate governance failures on the part of Manuel.
"[Moyo's] depiction of himself as being engaged in a battle against a delinquent corporate entity simply does not withstand even the most cursory scrutiny," says Kirsten.
Moyo repeats his reservations about Old Mutual paying some of Manuel's legal fees in a matter related to a dispute between Manuel and the Gupta family. The chair also allegedly ignored him when he voiced misgivings about Manuel being on both the Old Mutual and Rothschild boards - the latter earning fees on the restructuring of Old Mutual. Kirsten says Moyo's allegations were an afterthought to create "atmosphere".
"[Moyo] personally supported the decisions he claims to be 'exposing'," says Kirsten.
The former CEO says in his own court papers that he will push to have all 14 of Old Mutual's nonexecutive directors declared delinquent. This includes Manuel and the rest of the board allegedly under the former finance minister's sway.
Moyo adds the directors as respondents in his court papers. But this is totally unnecessary, according to Old Mutual, and is one of the reasons it wants Moyo to bear the brunt of the costs in the proceedings.
Old Mutual says it did nothing wrong in letting Moyo go as both parties were entitled to end the employment contract with proper notice. Old Mutual's approach probably even netted Moyo a few million rands more than he would otherwise have been due.
In the circumstances, due to the breakdown of trust and confidence in the CEO, the company was entitled to end Moyo's employment contract without notice, it says, but decided to give him the benefit of six months.
"In the present circumstances [Moyo] will shortly be paid a gross amount of around R4m in lieu of notice pay for the six-month period of notice," Kirsten says in her affidavit.
The life insurer lost confidence in Moyo due to his handling of conflicts of interest. NMT Capital, a company co-founded by Moyo and with Old Mutual as an investor, declared dividends to Moyo and others while preference share dividends to Old Mutual were in arrears - this, Old Mutual says, was in breach of its rights.
By the end of last year, Old Mutual's exposure to NMT Capital, NMT Group and related companies in terms of redeemable preference share capital and arrears preference share dividends amounted to R374.5m, the company says.
In Moyo's papers he touches on BEE and alleges that companies such as Old Mutual, as shareholders in companies such as NMT, have benefited from the system.
"A concomitant irony of this is that whatever economic benefits accrue to the new black entrants also accrue to the establishment company with which they seek ostensibly to 'catch up', economically speaking," his papers read.
The life insurer takes issue with this, responding at length that it is fully on board with broad-based BEE and supports the philosophy and principles of transformation. It then sticks the knife into Moyo's argument, with Kirsten saying in her affidavit that the former CEO "himself does not fall into the class of persons who are intended beneficiaries of B-BBEE in SA, having become a South African citizen by naturalisation only after 27 April 1994". Moyo was born in Zimbabwe.
