2nd Edition

First and foremost, we would like to apologise for the delay in our 2nd commentary edition as per our previous email we are working on a more broad and are still trying to grapple things with US GAAP because we also want to provide accurate and understandable information concerning US listed companies. So we are still in consultations with PwC and SAICA to assist us in bridging that. The reason we requested PwC is because of its international credibility and most recently its credibility in picking up and curating Steinhoff, African Bank and Bosasa.

So while that is still brewing, let's talk Old Mutual vs Brian Molefe.

So in case you missed it, Brian Molefe is the ousted Old Mutual group CEO, who was suspended earlier this year and subsequently fired.

Why?

Well Old Mutual claims that as he is a director and one of the founding members of NMT Capital, the 'M' standing for Molefe, he and his fellow directors have withheld a preferential dividend worth millions that Old Mutual is entitled to. However, Molefe came out guns blazing claiming that this was not the true reason as to why he was fired.

He claimed that the Old Mutual Board Chair, Trevor Manuel, has had too many conflicts of interest which have benefited him financially that Manuel was not willing to disclose to shareholders. For instance the legal fees of a personal case concerning Manuel was footed by the Group, furthermore as Manuel was the Chair of the Board he had a voting right when Old Mutual delisted from London's stock market, and he was subsequently the Chair of Old Mutual London's Board and a director of the company of the company that was granted the contract to delist the company from London - which is what Molefe titled the "triple conflict of interest" as Manuel benefited from all angles.

Fast forward to 30 July 2019, Old Mutual lost against Molefe and it was instructed to rehire him as his ousting was not constitutional, pay for his legal fees in full and interdicted Old Mutual from filling the CEO position.

Any rational person would think the insurer would take the L for the benefit of the shareholders and get 'one of the greatest' CEOs of all time back, but no - just a few hours ago they made an announcement to shareholders that they would appeal the court's decision.

In our opinion, trade cautiously, as one of the biggest insurer, Old Mutual does not have a captain as it battling with it in court. So if the Board is still willing to waste shareholder value fighting to keep a court declared CEO out, who is to say there aren't more skeletons in that closet.

In other SA News

Eskom has claimed over 12 CEOs in 20 years but has managed to receive a further a R59bn over the next 5 years, which will obviously be forced out South Africans' pockets. The government does not regard that Eskom paid 300x more than it should have for coal nor the fact that Eskom needs revamping in its debt collection from specific municipalities - but we all have to suffer for the select few. As an affected citizen, what do you feel the government should be doing to keep our lights on?

This is our opinion on these matters and we'd like to hear from you. Just reply to this email and let's engage.

Kind regards,

The Eagle-Investments Team