THE CENTRAL Bank of Ireland has withdrawn an application to the High Court for costs in relation to the investigation into failed investment firm Custom House Capital.

It is understood that the Central Bank’s costs – both for legal expenses and the investigation – amounted to about €500,000. Such an award by the High Court to the Central Bank would have reduced the amount of money available to investors in the failed company.

A spokesman for the regulator confirmed to The Irish Times that this decision was made to allow investors of Custom House Capital to get as much as possible from the winding up process.

A spokesman for 150 investors in Custom House Capital, who were represented by Lavelle Coleman solicitors, welcomed the fact that no cost order was awarded against Custom House Capital.

In a judgment delivered yesterday, Mr Justice Gerard Hogan said he ordered the winding up of firm Custom House Capital because of “systemic and pervasive” misconduct of the firm found by two Central Bank inspectors.

It was in the public interest such conduct “should not be tolerated for an instant”, the judge said.

Liquidation was also in the interests of creditors as a whole and, had it not been ordered, its affairs would have collapsed in “a disorderly and chaotic fashion”.

While the contents of the inspectors report on Custom House Capital would in ordinary circumstances be regarded as “deeply shocking”, sadly “our capacity to be shocked by nefarious conduct in the financial world has been diluted by incredible and remarkable events over the last three years both at home and abroad”, he said.

It was telling that lawyers for Custom House Capital had expressly stated the company did not dispute the inspectors’ findings and conclusions, he added.

The judge made the comments in a judgment yesterday giving his reasons for his decision last week to appoint a liquidator to Custom House Capital after the inspectors reported “systemic and deliberate misuse” of more than €56 million of client funds.

A further €10.4 million is owed to the company’s clients on an investment bond.

In his judgment, Mr Justice Hogan said Custom House Capital had begun its “long slide towards perfidy and oblivion” from the time of the credit crunch in 2007 when the firm found itself over-committed to European property deals with prospective investors declining to invest.

By the time the winding-up was ordered, Custom House Capital was exhibiting some of the classic characteristics of “a full-blown Ponzi scheme” with accounts of customers being raided to cover cash deficits elsewhere to give the impression it was solvent and trading normally.

It was plain from the inspectors’ report that, on any view, Custom House Capital was insolvent with a misuse of client funds estimated as about €66 million, he said.

The issue before him last week was whether the court should immediately appoint a liquidator to the company.

The inspectors had sought the winding up of the firm and, as they were senior officials in the Central Bank, their views weighed heavily with the court.

A second factor was that Custom House Capital was not of systemic importance to the Irish financial system while a third factor was that winding up was in the interests of creditors as a whole.