Davy scandal: ‘Toxic culture’ of bank-collapse era ‘alive and well’

Sinn Féin leader Mary Lou McDonald has claimed the “toxic culture” that brought Ireland to its knees in the banking collapse over a decade ago is “truly alive and well”.

She made the accusation in the Dáil in the wake of the Davy stockbroker scandal over a bond deal by 16 staff members, including top executives, with a client who was not told of their involvement, nor was the company’s compliance team.

There were sharp exchanges with Taoiseach Micheál Martin when Ms McDonald hit out at the “revolving door between the financial industry and politics and a door that just keeps on spinning where we see ministers of state seamlessly move from politics to jobs in high finance”.

She said the brokerage-firm scandal was not an isolated event and cited the tracker-mortgage scandal that affected 40,000 people but saw nobody held to account.

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Ms McDonald said it was “not really accurate” to say the 16 staff were no longer employed by the company because “they have left one cog of the corporate structure but they remain directors in key parts of the overarching organisation”.

Ms McDonald said the 16 had not been named but “we need to know where they are now” and whether any are working in Government departments or in banks the Government has a stake in.

She said the €4.1 million fine and decision by the National Treasury Management Agency (NTMA) to withdraw the firm’s ability to act as a primary dealer of Irish Government bonds were corporate sanctions – and none of of the 16 had been “held to account”.

Mr Martin said although the Central Bank had extensive accountability powers, the Government will introduce the heads of a Bill “soon” on heightened accountability in the financial sector and senior executive accountability.

He said that in relation to further action “it is up to the ODCE [Office of the Director for Corporate Enforcement] and also potentially other bodies” to move on this and he did not want to prejudice any further action.

The Taoiseach said external examiners would be part of an independent review by Davy, but Ms McDonald said this was not good enough and that the Central Bank as regulator should be deciding the terms of any review.

Mr Martin said the behaviour of senior Davy executives damaged the reputation of Ireland’s financial services sector. “Executives in business or in the financial service services should never put personal gain above their and responsibilities.”

But he hit out at Ms McDonald’s criticism of a “revolving door” between Government Ministers and the financial sector; Mr Martin said Sinn Féin “cosies up to high finance as well”.

“You’re keen to brand other parties in relationships,” but his party had not been in government for 10 years as he accused Ms McDonald of failing to be accountable when it came to financial data, citing the €4 million donation from the estate of a Sinn Féin supporter in England.

Mr Martin added that in the last decade 100 pieces of legislation had been introduced to “underpin and strengthen the regulatory framework”.

The Davy scandal has led to a record €4.15 million fine of the brokerage, the resignation of three top executives and the unprecedented move by the NTMA to withdraw the firm’s ability to act as a primary dealer of Irish Government bonds.

Mr Martin said the behaviour of the Davy executives “was absolutely unacceptable. And I think reveals an appalling culture of greed and has damaged the reputation of the financial services sector in this country”.

He also said the NTMA “made the right decision” and that it was unacceptable the issue had been going on since 2014 and that the company sought to frustrate the efforts of the Central Bank – the regulator – to get to the truth.