Stories
When heads finally rolled at Davy on Saturday in the face of the Anglo bond scandal, the devil was in the detail – and the detail was in the positions actually resigned by senior executives involved in the 2014 transaction that led to a €4.13 million Central Bank fine.
J&E Davy chairman John Corrigan said his board had accepted the resignations of chief executive Brian McKiernan, deputy chairman Kyran McLaughlin and head of bonds Barry Nangle. McKiernan confirmed in an individual statement: “I have today informed the Board of J&E Davy of my resignation as CEO and director of the company” – of this particular company.
Yet J&E Davy, the stockbroker’s main trading entity and centre of executive action, is just one part of the corporate jigsaw. When it comes to the full extrication of participants in the improper 2014 transaction and their interests from the business, the next steps will play out in the superior echelons of the group’s ownership structure. And there have been no resignations announced at this level so far.
Click on the image to download Davy’s corporate map.
On December 20, 2017, four company directors met at Davy House on Dawson St to sign a bundle of documents that would shape the command and control structure of Davy as we know it today. The file, seen by The Currency, was an application to re-register an Isle of Man-registered company called White Note Ltd as an unlimited entity with a new shareholding structure.
White Note is at the centre of a group of similarly-named related companies and constitutes the nexus around which ownership of Davy revolves:
- Downstream, White Note owns the overwhelming majority of shares in Green Note and its subsidiary J&E Davy Holdings, the parent of J&E Davy – as well as a single share in each indirect subsidiary, which ensures its directors have access to company information at all levels.
- Upstream, White Note is the meeting point of two group ownership branches, one leading to interests held on behalf of undisclosed investors by a Gibraltar corporate secretary, and the other to Irish-based vehicles and shareholders.
The 2017 filing was signed by White Note directors Brian McKiernan and Kyran McLaughlin, who have now freshly resigned from J&E Davy; Peter Newman, then finance director at Davy; and David Smith. Smith, the former head of institutional equities at Davy and a member of the private consortium who bought the controversial Anglo bonds, had officially resigned from his position in 2016. His sign-off on a central corporate restructuring document more than one year later shows the potential gap between public announcements on senior executives leaving J&E Davy and their involvement in the group’s corporate affairs.
Money channel and power channel
Under the terms of White Note’s 2017 re-registration, the Gibraltar-held portion of the group owns A shares conferring no voting rights but equal participation in profit distributions and unlimited liability. This is the main money channel. Intermediary holding companies in this branch each have two directors combining any of Brian McKiernan; his deputy Bernard Byrne, appointed interim chief executive on Saturday; and Caitriona O’Kelly, who was chief financial officer until her position changed last month to that of chief risk and regulatory officer. She also sits on J&E Davy’s board. Both Byrne and O’Kelly only joined Davy in 2019 and replaced Newman on the boards of holding companies shortly afterwards.
The Irish-based ownership branch of White Note, meanwhile, holds B shares carrying all voting rights and only limited liability in the group’s Manx central holding company. This is the power channel. It runs through Amber Note and Ailmount Investments, two companies where McKiernan, McLaughlin, and Barry Nangle hold board seats. There has been no mention of this responsibility in the resignation statements issued at the weekend. Their co-directors are David Smith – again – as well as Davy’s Head of Private Clients Pat Cooney.
Ailmount is ultimately owned by 30 equal shareholders including its five directors, all current or past senior executives at Davy. Among the 16 buyers of the infamous Anglo bond deal, six were identified by The Currency. Five of these are still shareholders in Ailmount, four of whom sit on its board. The representative they sent to sign off on the 2017 White Note capital restructure was Brian McKiernan.
This is where power lies – and decisions will be made by virtue of the votes attached to White Note’s share rights – should there be any attempt to untangle the ownership and influence of the Davy 16 in the business, and set the terms of their full exit. The structure shows that a revolution among the 30 senior figures who own Ailmount Investments would be required to overthrow them.
Many shareholders in Ailmount are not connected in any way with the 2014 transaction at the centre of the Central Bank investigation. Some have joined Davy since then. Others knew nothing of the transaction at the time and left for entirely unrelated reasons. The anger they must feel at the destruction of the business they helped to build up, joined, or remain invested in could be turned into a salvaging force.
Meanwhile, the board of J&E Davy and its immediate parent, chaired by former NTMA Chief Executive John Corrigan, can act solely on client-facing aspects of the business, such as executive appointments and trading standards. Corrigan’s name does not appear on the boards of any of the group’s holding entities.
In light of the information above, The Currency asked a spokesman for Davy whether McKiernan, McLaughlin and Nangle would resign from their directorships of multiple group companies aside from J&E Davy; whether the same would apply to other members of the consortium of 16, such as David Smith; whether Byrne and McKiernan would continue to sit together on the boards of some of Davy’s holding companies; and what was the purpose of Ailmount Investments;
The company had not yet replied at the time of publication.
