Firm misused €56m of clients’ funds

A PENSIONS and investment firm has been wound up after misusing €56 million in clients’ money to cover up troubled property deals.

The Director of Public Prosecutions is to be asked to consider criminal charges against principles of Dublin-based Custom House Capital (CHC), following the revelations uncovered by Central Bank inspectors.

All 1,500 clients of the company will be contacted soon as a High Court-appointed liquidator begins the work of establishing whose money was misused and how much was lost.

Sources close to the investigation said it was hoped a substantial portion of the €56m could be recovered as it was linked to properties in European countries not so badly affected by the property crash.

The report submitted to the High Court to support the Central Bank’s application for the winding up of the company states: “There was a systematic and deliberate misuse of assets and cash belonging directly or indirectly to clients of CHC.

“This misuse was deliberately disguised by CHC through the use of false accounting entries and the issue of false and misleading statements to clients.”

Harry Cassidy, who was paid an annual salary of €430,000, stepped down as the company’s chief executive when the inspectors’ investigation began last summer.

“CHC’s board of directors and its senior management failed in their duties to clients and allowed the company to operate with inadequate internal controls over a significant period of time,” the report states.

One of the main ways in which client funds were misused was that money meant to be held as cash was used as loans or investments for the company’s own property projects and for the payment of day-to-day bills in relation to property projects when the number of clients wanting to invest specifically in property slumped in 2007.

Clients will also be contacted by the Investor Compensation Company inviting them to claim compensation of up to €20,000.

The High Court also ordered that the inspectors’ report be sent to the Director of Corporate Enforcement and the Revenue Commissioners for appropriate action.

Some investors claim the Central Bank had been slow to act when it started its investigation of CHC.