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SFO admits to shocking errors in Tchenguiz fraud case
Britain's Serious Fraud Office suffered a major setback in its investigation into the Tchenguiz brothers and will now face a judicial review following errors made in the case, it has been announced today.
Police raid: dawn swoop on property barons
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The case against the Iranian-born property barons appears close to collapse after the SFO admitted to a catalogue of mistakes relating to evidence used against the businessmen.
According to a report in the Financial Times, lawyers’ letters show that investigators did not see vital documents, incorrectly obtained search warrants and inaccurately summarised a report by accountancy firm Grant Thornton relating to the failed Icelandic bank, Kaupthing.
Compensation
The mistakes led to the SFO swooping on Robert Tchenzuig, Kaupthing’s biggest shareholder and customer, and his brother Vincent, who had taken a £100 million loan with the bank shortly before its collapse.
The SFO also accused Vincent of not disclosing the existence of senior lenders – including the Royal Bank of Scotland and Merrill Lynch – that would have priority ahead of Kaupthing on any assets pledged as collateral to the loan. However, Kaupthing revealed it was aware of the senior lenders, and the loan agreement in fact mentioned senior lenders 141 times.
The Independent newspaper reports that the brothers are now seeking damages of more than £100 million for ‘wrongful arrest’, with other factors set to push the compensation higher still.
Huge embarrassment
The controversial case could prove to be a huge embarrassment for the SFO as, according to The Daily Telegraph, up to 20 staff worked on the case at any one time and significant financial resources have been devoted to the investigation.
In a damning comment at a preliminary hearing yesterday, Lord Goldsmith, counsel for Vincent and the former UK Attorney General who is now a partner in the London office of US law firm Debevoise & Plimpton, said: ‘The SFO are now acknowledging… that they now understand the allegations they made were not true, but actually they had at the time information from which they knew this was untrue.’
According to a report in the Financial Times, lawyers’ letters show that investigators did not see vital documents, incorrectly obtained search warrants and inaccurately summarised a report by accountancy firm Grant Thornton relating to the failed Icelandic bank, Kaupthing.
Compensation
The mistakes led to the SFO swooping on Robert Tchenzuig, Kaupthing’s biggest shareholder and customer, and his brother Vincent, who had taken a £100 million loan with the bank shortly before its collapse.
The SFO also accused Vincent of not disclosing the existence of senior lenders – including the Royal Bank of Scotland and Merrill Lynch – that would have priority ahead of Kaupthing on any assets pledged as collateral to the loan. However, Kaupthing revealed it was aware of the senior lenders, and the loan agreement in fact mentioned senior lenders 141 times.
The Independent newspaper reports that the brothers are now seeking damages of more than £100 million for ‘wrongful arrest’, with other factors set to push the compensation higher still.
Huge embarrassment
The controversial case could prove to be a huge embarrassment for the SFO as, according to The Daily Telegraph, up to 20 staff worked on the case at any one time and significant financial resources have been devoted to the investigation.
In a damning comment at a preliminary hearing yesterday, Lord Goldsmith, counsel for Vincent and the former UK Attorney General who is now a partner in the London office of US law firm Debevoise & Plimpton, said: ‘The SFO are now acknowledging… that they now understand the allegations they made were not true, but actually they had at the time information from which they knew this was untrue.’
