Paschal Donohoe: Davy should make public statement on €4.1m fine

Fine is largest handed out to an Irish stockbroker but no personal sanctions imposed
Paschal Donohoe: Davy should make public statement on €4.1m fine

Finance Minister Paschal Donohoe. Picture: Brian Lawless/PA Wire

Finance Minister Paschal Donohoe has said Davy Stockbrokers should make a public statement on the circumstances around the record-breaking fine it was hit with on Tuesday.

The Central Bank imposed a €4.1m fine — the largest ever handed out to an Irish stockbroker — after Davy failed to supervise a group of 16 of its own employees in their personal account dealings in the sale of Anglo Irish bonds for a client of the firm in late 2014. 

However, no personal sanctions have been imposed and a spokesperson declined to add a comment beyond what was contained in the Central Bank's investigation.

“Davy prioritised facilitating an opportunity for the consortium to make a personal financial gain over ensuring that it was complying with its regulatory obligations," the Central Bank said.

Mr Donohoe said the value of "an independent regulator" was seen because of the finding and the "thoroughness of the investigation". He said, however, that he could not "second guess" the findings.

"What I want to do is just reiterate two points that I've already made. Firstly, to join with the Central Bank in acknowledging the grave seriousness of this as an issue.

"And secondly to say that I do believe it is appropriate that a public statement be made on this matter now by Davy Stockbrokers."

Asked about AIB's purchase of Goodbody, the minister said he would allow 30 staff over a two-year period to move from the bank to the stockbroker.

These staff would not be subject to the cap on bankers' bonuses. 

'Political stroke'

Sinn Féin's Pearse Doherty called the purchase a "political stroke". 

The transfer mechanism has been sharply criticised by some within Mr Donohoe's own Cabinet and the opposition for “opening the door” to bonuses again in the bank, which was bailed out to the tune of €32bn by the taxpayer.

Mr Donohoe told RTÉ's Morning Ireland that the mechanism is needed for a number of reasons.

"Firstly AIB will want to be involved in Goodbody and they will want people in place who are able to integrate it into the AIB business," he said.

"Secondly, if we were in a situation where I didn't have a way of allowing a very, very small amount of movement, it could create the bizarre situation that people leave AIB to go and work for Goodbody and circumvent the pay policy that we have in place. 

"This covers 30 people, potentially over a two-year period. AIB currently has over 9,000 people working for them. 

"And the reason why I believe this is appropriate is that I believe this is in the long-term interests of three Irish companies that are important to our economy AIB, Fexco, and Goodbody."

Austerity not inevitable

Mr Donohoe said there is nothing inevitable about austerity once the pandemic is over. 

He said that Ireland was in a stable financial position entering the Covid-19 outbreak and was, therefore, able to fund higher levels of debt. 

He said, however, that if the country carries a "far bigger deb" into the coming years, that may need to be paid for. The latest exchequer figures published on Tuesday show a widening between income and expenditure.

"We will be able to deal with the vast majority of extra spending that we are accruing. Getting people back to work, getting the economy running again, that will deal with a very large amount of that spending."

He said the Government's priority had been to protect jobs and businesses and when the pandemic ends, so to will many supports on a graduated basis.

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Wednesday, April 21, 2021

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