Donohoe to brief Cabinet on Davy scandal

over 4 years in The Irish Times

The Minister for Finance Paschal Donohoe will update Cabinet on the Davy scandal on Tuesday, the Minister for Higher Education, Simon Harris has said.
He also said that “developments and clarity” were likely in the coming days on the stockbroker’s relationship with State debt agency, the National Treasury Management Agency.
“I understand the NTMA are engaging very intensively with the Department of Finance on this matter,” he said on Monday.
Sinn Féin finance spokesman Pearse Doherty called on the NTMA and Government to “cut its ties” with the broker.
“I think we’re left in a situation where the State can’t continue to provide reputational cover to an organisation which basically tried to ride this out… which issued a number of internal memos to its staff without acknowledging what had happened, and which only saw resignations of three individuals after public pressure.
“Davy have been caught out red-handed, not only that, but the organisation as an entity has decided not to deal with this. That is unacceptable.
Share ownership
Mr Harris said the continuing ownership of shares in the company by top management who have resigned over their roles in the affair “does not sit well with me at all”.
Speaking on RTÉ’s Today with Claire Byrne, he said. “I can fully understand why people would feel uncomfortable with the idea of people having significant shareholdings and therefore significant influence over an institution in which there has been a major issue.”
The Irish Times reported over the weekend that the group of 16 individuals involved in a 2014 trade that led to the record €4.1 million regulatory fine and rebuke last week for breach of market rules, are estimated to own at least a third of a business that is estimated to be worth about €400 million.
“What happened in Davy has sadly given us an insight into the bad old days that we all hoped were behind us, I think it has rightly repulsed people and I think it has shaken confidence at a time when we all need confidence in everything to do with our financial services.”
Mr Harris noted that the Central Bank has significant powers “ in terms of pursuing individuals” after finding a company guilty of wrongdoing “and I certainly would hope to see very, very robust investigations into this”.
“I fully agree the Government needs to be seen to take a very strong stance in relation to this and what I’m indicating to you today is that the Minister for Finance will update Cabinet tomorrow following engagement between the NTMA and his department that’s ongoing today,” Mr Harris said.
Earlier, Financial Services Union general secretary John O’Connell called for a thorough, independent review of the operation of stockbroker Davy.
Deterrent
Speaking on RTÉ’s Morning Ireland, he said the record fine imposed on the company by the Central Bank was not sufficient deterrent given the lack of transparency about what had happened.
And he also said the regulator needed to explain why the investigation into the company over an incident seven years ago was only coming to a conclusion now.
And the union leader also questioned Davy’s continued involvement in handling bond sales for the State. The Government had to answer that question, Mr O’Connell said, and that the public was looking to the Government to lead and to show that when there was “wrongdoing”, there were consequences.
There was a reputational issue for the entire sector, he said. That needed to be addressed and investigated further. He said there were concerns about the culture within the sector and why no-one had spoken out.
Mr O’Connell said there was a need to “get to the heart of it” quickly and for those responsible to take accountability for what they had done. The fact that compliance controls had been so easily circumvented shows the sector was not capable of policing itself, he said.

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