By Mark Duell
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The Serious Fraud Office committed a catalogue of errors during its disastrous probe into the Tchenguiz brothers, two leading judges said yesterday.
Their scathing High Court ruling found that the agency had unlawfully obtained search warrants for its investigation of the property magnates.
The agency is bracing itself for a huge damages lawsuit which could run into tens of millions of pounds – possibly dwarfing its annual budget of 32million.
Seeking damages: Vincent Tchenguiz and companion in Camden, north London
Property ycoons Robert Tchenguiz, left, and his brother Vincent Tchenguiz before they were arrested last year by the Serious Fraud Office
The judges warned that 'incalculable damage' will be done to markets if proper resources are not made available for future fraud investigations. Last month the SFO began investigating attempts to manipulate the Libor interbank lending rates.
Judges ruled today that Vincent Tchenguiz was unlawfully arrested and searched
Oral evidence given by the SFO at the original search warrants hearing was 'unfair and inaccurate' and its tone was 'unjustified', the court found.
The judges said there was a failure to set out the background, a lack of clarity, errors and a failure to put forward the issues against them being granted.
Investigators have been probing the Tchenguizes' dealings with Icelandic bank Kaupthing, which they tapped for large loans shortly before it buckled in 2008.
The brothers were arrested and questioned last March after their offices were searched – but both were released on bail without charge, pending further investigation.
Yesterday Queen's Bench Division president Sir John Thomas and Mr Justice Silber upheld the challenge against the legality of the warrants and sent the case to another court to assess the level of damages.
The ruling piles further pressure on new SFO chief David Green, who dropped the case against Vincent Tchenguiz in June as one of his first jobs in office.
But the SFO last night vowed to press ahead with its probe into brother Robert who, along with his firms, owed Kaupthing 1.6billion when it collapsed.
A Police van outside in central London during the swoop on the two brothers in March 2011
A branch of Iceland's Kaupthing Bank, in Reykjavik, which collapsed in 2008. The Serious Fraud Office are investigating its failure.
The brothers said the publicity surrounding their arrest and raids has inflicted lasting damage on their reputations and businesses.
In a statement Vincent said he would be seeking compensation.
'The series of concessions made by the SFO following the raids on my home and offices had already shown that the search warrants were flawed,' he added.
'Today's judgment highlights that the orders for those searches, which have caused massive damage to my business and to my reputation, should never have been granted.
'I will be seeking damages from the SFO – and from any other parties who contributed to the court being misled.'
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