SFO drops Tchenguiz probe in PR debacle
LONDON (Reuters) - Britain's top financial crime investigators on Monday dropped their probe of property tycoon Vincent Tchenguiz in a humiliating admission of error that could leave the crime-fighting agency facing a large bill for damages.
The probe began when brothers Vincent and Robert Tchenguiz were arrested in March 2011 on orders from the Serious Fraud office (SFO) in dawn raids on their homes and offices that were splashed across the British press.
The SFO's new director, David Green, ruled after an urgent review of the case that there were "no longer reasonable grounds" to consider Vincent Tchenguiz a suspect, a spokeswoman said on Monday.
"It is a huge relief that, under the new director of the SFO, this shadow has now been lifted and I can get on with rebuilding my life and my business interests," said Vincent Tchenguiz in a statement.
"The damage, however, has still to be accounted for," he said.
Tchenguiz wrote to the SFO late last year to signal his intention to sue for damages. His argument looks stronger now that the agency has admitted error in his case.
The investigation stems from the brothers' complex dealings with Icelandic bank Kaupthing, which loaned them 180 million pounds in March 2008 and collapsed seven months later under a mountain of debt. British retail depositors lost millions in the Kaupthing disaster.
Robert Tchenguiz remains a suspect in a probe into the demise of Kaupthing. He sat on the board of the bank's largest shareholder, Icelandic firm Exista.
The Tchenguiz brothers, who have made headlines in the British media over their lavish parties and luxury lifestyle, have said the publicity surrounding the March 2011 raids inflicted lasting damage on their reputations and businesses.
The state-funded SFO, which earned the nickname "Serious Farce Office" in satirical magazine Private Eye over a string of bungled cases, could face an uncertain future at a time of drastic government spending cuts.
One of Britain's most senior judges accused the agency of "sheer incompetence" in its handling of the Tchenguiz case.
"The Tchenguiz case has shown the SFO at its very worst: unable to get even some of the basics right," said Barry Vitou, a partner at law firm Pinsent Masons.
"Under new management and having put at least some of the legacy Tchenguiz debacle behind them, the SFO has a chance for a fresh start. However, this fresh start could be put at risk by budget cuts and a lack of confidence."
Green said last week he intended to refocus the SFO on big cases and on improving the quality of its work, leaving small-time fraud to other law enforcement agencies.
"Is the SFO here to stay? Yes, it is here to stay. Does it have to prove itself? Yes it does," Green told Reuters.
(Editing by Mark Potter and David Cowell)
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