OM fires Moyo – again! MrP plunges, Italtile shines; Mboweni tightens belts; KPMG in HK protest scandal

By Jackie Cameron

  • Old Mutual has fired its CEO Peter Moyo – again. Moyo has been involved in a bitter dispute with Old Mutual Chairman Trevor Manuel in connection with private business dealings that were declared when Moyo first took up his role at the helm of the life assurer. Moyo was suspended earlier this year, then reinstated, but Old Mutual’s lawyers keep trying to axe him. On Thursday, the 174-year-old insurer gave Moyo further notice of termination in a dispute that erupted in May, reports Bloomberg. The news wire says the door to Peter Moyo’s office at Old Mutual’s headquarters in Johannesburg may as well be replaced with a revolving one as his feud with Chairman Trevor Manuel turns increasingly bitter. The shares have declined 15% since Moyo’s suspension was announced, the second-worst performer in the FTSE/JSE Africa Life Assurance Index. Assertions that directors are “collectively unable to act independently or are under the sway” of Manuel, a former finance minister, are “insulting, baseless, and defamatory, and they do not warrant more detailed response.”
  • Mr Price plunged on the JSE, falling as much as 14% to the lowest in more than two years in Johannesburg. It dragged some retailers down with it, says Bloomberg. Truworths International slipped 3.6% and Woolworths 2.6% as an index of general retailers dropped the most in seven months. Mr Price has blamed the poor economy for its woes. Economic expansion, unemployment, inflation and disposable income remain at levels that aren’t supportive of growth, the retailer reportedly said. The clothing business provided the greatest headwinds, with the company failing to get its product mix right, causing “an imbalance in the shape of the assortment” and deeper-than-desired markdowns that hit margins, reports Bloomberg.
  • Manufacturer and retailer Italtile jumped 10% on the JSE on Thursday. Apparently negative consumer sentiment has failed to dampen activities in its stores. The tile manufacturer and retailer reported healthy finances when it released its financial results. Its group turnover was up 15% to R10bn for the financial year ending in June, and its profits were up 18%, according to SENS. The good results have encouraged its board to award investors a special dividend (50c per share) on top of an ordinary dividend (19c per share).
  • Finance Minister Tito Mboweni is set to cut government spending by as much as R300bn over the next three years, says Bloomberg. The government needs money to fix Eskom and, with a weak economy hitting tax collection, it is looking at reducing government expenditure. The National Treasury has asked departments to prepare proposals on how to cut costs in a way that has the least impact on service delivery. It’s seeking cuts of 5% for 2020-21, and 6% and 7% for the next two years – a move that could placate credit ratings companies such as Moody’s Investors Service, the last major firm to assess South Africa’s debt at investment grade, and reduce the need for tax hikes.
  • Britain lurches closer to a no-deal Brexit at the end of October. French President Emmanuel Macron gave UK Prime Minister Boris Johnson little hope he’s prepared to compromise on Brexit and said any changes to the current deal won’t be very significant, reports Bloomberg. “Let me be very clear, we will not find a new withdrawal agreement within 30 days that will be very different from the existing one,” Macron told reporters as he stood alongside Johnson. “We have to respect what was negotiated.” The Brexit deal, which took 19 months for Johnson’s predecessor, Theresa May, and the 27 other EU governments to agree, was rejected three times by the British Parliament. Johnson is demanding the EU scrap the so-called backstop, the mechanism designed to keep the Irish border free of checks after Brexit that’s a key part of the agreement, says Bloomberg.
  • KPMG, the Big Four auditing firm at the centre of South Africa’s state capture and corruption scandals in the Zuma era, has controversially pledged support for China in its crackdown on protestors in Hong Kong. As anti-government protests in Hong Kong intensified this month, KPMG told its employees that the firm supports China’s policy for governing Hong Kong, reports Bloomberg. This is the new reality for multinational businesses that have long grappled with a thorny question on China: What’s the price of access to Asia’s biggest economy? Beijing’s response to the protests, most notably its clampdown on Cathay Pacific Airways this month, has provided one answer: compliance with the Communist Party’s worldview, from senior management on down.