Fintan O’Toole: Deception by the Davy 16 was based on pure greed

They were ghouls, preying on the remains of shattered lives. Encoded in the Anglo Irish Bank bonds that 16 people at Davy stockbrokers were using for their greasy little scam were lost jobs, lost homes, lost childhoods – and the humiliation of a nation.

This was November 2014. Ireland had just emerged from its infantilised existence as a ward of the Troika. We were still paying the hideous bill run up by casino bankers and the culture of impunity that allowed them to run rampant.

Those Anglo bonds were the debris of a disaster. Their owner Patrick Kearney was one 10 property developers – "the Maple 10" – illegally lent money by Anglo in the summer of 2008 to buy its shares to inflate its stock price.

In 2014, Kearney asked Davy to sell Anglo bonds he had separately bought with a loan the bank itself gave him. He believed, as the Central Bank put it last week, that Davy was “advising him on the highest achievable price for the bonds”.

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Instead, the Davy 16 established a secret consortium to buy them. “No disclosure was made to the client as to the identity of the consortium members.” The reason for the deception was pure greed – a large tranche of the bonds was sold on three weeks later to a fund manager.

That year, the State was still sucking money out of a shrunken economy: €2.1 billion in extra taxes and spending cuts. Prescription charges for medical card holders were nearly doubled. The bereavement grant was scrapped. The telephone allowance was taken away from pensioners.

At the time when the Davy cabal spotted the chance to make a quick killing out of the relics of our collective suffering and shame, the government was actively considering yet more drastic measures: limiting the invalidity pension, cutting illness benefit, closing 300 more hospital beds, cancelling 2,400 high tech operations and restricting the opening hours of five hospital emergency departments.

We had learned the hard way that the golden circles of Irish high finance could not spell the word “ethical”. But I confess that, in the autumn of 2014, if I’d been asked whether a respectable Irish stockbroking firm could be pulling a scam with Anglo bonds, I would have said no – too low.

Maybe this is part of the problem of being in a small country – you always think there’s some depth your compatriots wouldn’t sink to, some limit to their shamelessness.

Surely, you think, they wouldn’t do this right now and with these particular materials. Surely they wouldn’t use the very tokens of our desolation to prove that the cowboy culture that had caused it was still giving, in the plush privacy of its boardrooms, a gleeful yee-haw at the glimpse of another golden calf to rustle.

These were not minor characters. Kyran McLaughlin, Davy’s deputy chairman, who resigned on Friday, was a big beast in the Irish corporate world, at the centre of much of its deal-making. Davy also has a privileged position in relation to the State’s own finances: it is – or was up until Monday – the only Irish-owned primary dealer in Government bonds.

Not only, however, did they do it, but they had set up a system that allowed them to do it. It is clear from the Central Bank report that Davy’s compliance regime was a joke. One sentence says it all: “There was nothing in the rules to prevent members of the committee from approving a transaction in which they themselves were participating.”

Again, this is 2014 – six years after this country was brought to its knees by a financial industry in which standards were for suckers. The cost of these attitudes was still etched on the faces of its citizens.

How had this pillar of the financial establishment responded to the catastrophe of lax regulation? With a system of internal regulation that practically invited senior staff to mix their own interests with those of their clients.

Why would you set up a compliance regime that you knew you could completely ignore whenever you saw the chance of making a quick buck for yourself and the lads? The only plausible answer would seem to be that the Kearney deal was not a one-off aberration. We – and the Central Bank – happen to know about it because Kearney sued Davy. But the firm’s governance system allowed senior people to engage in the most egregious self-dealing. That’s no accident.

And this is not just about 2014 either. When Kearney sued and the Central Bank began to ask questions, “Davy provided vague and misleading details and wilfully withheld information”. That’s a polite way of saying that Davy lied to the financial regulator.

So €4.1 million corporate fine be damned. (Though one wonders what a firm would have to do to merit the maximum €10 million fine – burn down the Central Bank?) Right at the time when our wounds were raw and still bleeding, these people stuck in the knife of greed and arrogance and unabashed entitlement.

That’s a challenge, fair and square: even after everything that happened, they asserted their right to carry on regardless. We know all the costs of impunity. If these individuals get away with it, we deserve the consequences.