Davy’s dodgy deal echoes Anglo days
ANYONE who thought the Wild West practices of corporate Ireland were dead and buried with the Celtic Tiger in the grave received a rude awakening with the revelation that the country’s largest stockbroker firm,
Davy, broke market rules in a conflict of interest bond-selling transaction covertly designed and executed in such a brazen manner as to take the breath away.
The deal, which netted huge profits for 16 of the individuals at and associated with Davy, has its roots in the collapse of Anglo Irish Bank, the institution forever attached in the public mind to the economic and banking collapse 13 years ago that led to the imposition of great hardships.
As the various activities at Anglo Irish Bank were being unravelled in 2014, the Davy 16 spotted an opportunity to fill their boots in a dodgy bond-selling deal, took it and then tried to obfuscate, riding a coach-and-horses through rules designed to regulate the industry in the process.
Davy is no ordinary company. Like no other, it reaches into the heart of corporate Ireland. It is also deeply entwined in the State’s financial systems. Last week, as outrage grew, Davy tried to tough it out. It announced steps had been taken to ensure such dealings could not recur. That was not good enough. Many of the people centrally involved were still in place at the company. Talk of board, management and staff “renewal” was just that — corporate public relations claptrap.
Yesterday, Davy finally bowed to pressure and announced the resignations of three senior individuals still at the company. We do not know how many of the 16 are still there. We should be told, and if any remain, a reason given why they too have not resigned. We should also be provided with further details of the resignations. Have the three left with golden handshakes? At a minimum, they should be obliged to return profits made from the bond-deal concerned.
The Central Bank has imposed a €4.1m fine on Davy. That will be met not by the individuals concerned, but by the company, which employs 800 people, the vast majority of whom knew nothing about the deal and were appalled by the actions of a few at the top and associates. The Central Bank penalty, while considerable, is still relatively small compared with massive profits at Davy, and will be met by fees paid for the companies’ services to private clients, small businesses, corporations and institutional investors.
In the Sunday Independent today, we also report on separate developments in a property development company that involves businessmen receiving massive directors’ loans months before the company was placed in voluntary liquidation. It is not known whether the loans have been repaid. Serious questions are now being asked, but answers have not been so forthcoming.
Ireland’s reputation took a battering toward the end and after the Celtic Tiger period. At that time, many swore: “Never again.” New rules and laws were put in place to safeguard against corporate malpractice. Yesterday, the board of Davy finally acted according to the scale of the deceit involved. Questions remain, however, one of which is whether the National Treasury Management Agency, which provides a range of asset and liability management services to the Government, should take its business elsewhere.