Davies was forced to resign as leader of the Liberal Democrats group in the European Parliament, due to the tone of a series of emails he exchanged with a Jewish constituent. Davies accused a Jewish constituent of "wallowing in your own filth"; accused Israel of "posing as a victim" while pursuing "racist policies of apartheid" and had written "I shall denounce the influence of the Jewish lobby that seems to have far too great a say over the political decision-making process in many countries." Party Leader Sir Menzies Campbell called his comments "unacceptable".

Outcome:

Davies made some widely publicised comments on an unpublished report which, he claimed, contained evidence of "embezzlement and fraud" among EU parliament members.

At the autumn 2009 Liberal Democrat conference in Bournemouth, Davies made a speech in a debate about the MP expenses scandal, where he appeared to become very angry, saying: "I hate the dirty cheating bastards who have taken every opportunity to fill their private pockets with public money … they should play no part in public life". He went on the implore his Liberal Democrat colleagues to "Publish everything, reveal all, hide nothing."