LONDON (Reuters) - Britain’s Serious Fraud Office has averted a 300 million-pound damages claim over its botched investigation into the Tchenguiz brothers, securing a second out-of-court settlement and closing an embarrassing chapter in its history.
Property barons Robert and Vincent Tchenguiz, renowned for their champagne-fuelled parties and super yachts, sued the agency over dawn raids on their homes and offices and their high-profile arrests in March 2011 in a case linked to the 2008 collapse of Iceland’s Kaupthing bank.
David Green, who took over as head of the agency one month later, has secured a 4.5 million-pound deal with the brothers, excluding hefty legal costs. The deal averts an October civil trial and further public airing of the SFO’s handling of a case that has already been slated as “incompetent” by a senior judge.
Just days after Vincent agreed to settle his dispute with the SFO for 3 million pounds, the SFO said on Thursday it had reached a similar 1.5 million-pound deal with Robert. It again offered its “deep regrets” for its errors.
“I am pleased that we have been able to resolve this final outstanding matter without the need for a costly trial,” said Green, who dropped the investigation into the brothers in 2012.
“On behalf of the SFO, I also apologise to Robert Tchenguiz for what happened to him. I reiterate that the SFO has changed a great deal since March 2011, and I am determined that the mistakes made over three years ago will not be repeated.”
The Iranian-born Tchenguiz brothers have argued that the publicity surrounding the raids and arrests three years ago inflicted lasting damage on their reputations and businesses.
But Robert said he was satisfied that the taxpayer, which funds the SFO to the tune of around 34 million pounds per year, should not bear the full financial pain of the “misguided actions” of the agency and its former head Richard Alderman.
“The most important thing to me is that the SFO has now apologised to me for the wrongs suffered and has, finally, cleared my name,” he said. “Reputation is all in the business community and I have at last had mine restored.”
Vincent and Robert blame what they call “external influences” for the “hugely damaging farce” that led to their arrest for suspected wrongdoing and have vowed to pursue those they say are responsible and liable for the damage caused.
Vincent has said he is considering his options against a number of third parties, including UK auditor Grant Thornton. He has yet to launch any action, however.
Vincent’s lawyers alleged in February that two employees of Grant Thornton - partner Steve Akers and Mark McDonald, a director - gave the SFO “misleading and inaccurate” information that sparked the flawed SFO probe and cost the brothers more than 2.5 billion pounds.
Robert said only that he intended to join his brother in pursuing unnamed third parties.
Grant Thornton has said it acted appropriately and in accordance with its responsibilities and legal obligations.
Akers and McDonald, who is based in the British Virgin Islands, were not immediately available for comment.
The Tchenguiz business empire, which once included large stakes in retailer J Sainsbury and a vast portfolio of property assets, was severely dented after the banking collapse in Iceland in which British retail depositors also lost millions.
Editing by David Holmes and Greg Mahlich