Custom House Capital debacle costs €6.6m
INVESTORS who lost out in the failure of Dublin firm Custom House Capital (CHC) have been paid more than €6.6m in compensation, Finance Minister Michael Noonan said.
CHC imploded in October 2011 after High Court inspectors uncovered the "systematic and deliberate misuse" of more than €56m of assets and cash belonging to clients of the firm.
Around the time of its collapse, a High Court judge described CHC as "a sort of Irish Ponzi scheme".
Now, Mr Noonan has confirmed in a written Dail reply to Fine Gael TD Eoghan Murphy that the Investor Compensation Company Ltd (ICCL) has paid out €6.6m to 428 claimants arising from the collapse of CHC.
The latest tranche of money was paid over by the statutory compensation vehicle in December when 27 parties received a total of €682,790.
In total last year, it paid out €5.6m to investors and this followed a pay-out of €1m in 2012.
The latest figures show that a little more than one in five claims has been successful to date, with Mr Noonan confirming the ICCL has received 1,969 claims from former clients of CHC.
The ICCL pays up to €20,000 in compensation to investors in firms which go bust – as long as the investment is covered by its compensation scheme.
However, not all investments sold by CHC are covered by the compensation scheme and many of CHC's customers invested a lot more than €20,000 in the firm.
Claims will be paid from a fund that the ICCL has built up over a number of years from contributions paid by the investment industry. The ICCL's reserves are in excess of €40m before account is taken of potential CHC compensation payments.
In his reply, Mr Noonan said the legislation provides that administrator Kieran Wallace of KPMG determines the validity of each claim and determines the level of compensatable loss to be paid: "I understand the administrator had indicated that this will be a protracted process given the complexity of the reconciliation process."