SFO pulls plug on Kaupthing investigation

The Serious Fraud Office (SFO) today called a halt to its high-profile three-year investigation into the UK's links to a failed Icelandic bank.

The probe into Iceland's Kaupthing last year saw two of Britain's wealthiest property magnates, Robert and Vincent Tchenguiz, arrested after a string of dawn raids in London.

But new SFO director David Green has pulled the plug on the investigation, which was launched in December 2009, after the agency found "insufficient evidence to justify its continuation".

With the probe closed, Robert Tchenguiz is no longer considered a suspect. His brother Vincent was told he was no longer a suspect in June. Both denied any wrongdoing following their arrest in March 2011.

The decision marks the end of an investigation that is considered to have caused the SFO significant reputational damage.

The case against Vincent Tchenguiz unwound earlier this year after the SFO was forced into making a series of concessions about having misunderstood evidence used to obtain search warrants against him.

A judicial review into the legality of the search warrants used against the brothers added to concerns about the SFO's handing of complex economic crimes and triggered one of the presiding judges, Sir John Thomas, to urge more funding for the agency.

Lord Goldsmith QC, representing Vincent Tchenguiz, told judges Sir John Thomas and Mr Justice Silber in May that the SFO made "false" and "misconceived" allegations.

In written submissions, Lord Goldsmith, a former attorney general, said: "A failure on the part of an investigating authority to pick up on every detail during the course of a major investigation is not necessarily evidence of negligence or dereliction of duty.

"But the nature and extent of the SFO's admitted errors in the present case are of a different order. In Vincent Tchenguiz's submission they point to collective institutional failure."

The brothers have argued that the investigation jeopardised their relationships with lenders and inflicted huge losses on them.

The SFO said when it launched the Kaupthing investigation that it would "seek to identify whether misrepresentations or false representations were communicated by the bank in the push to attract UK investors".

Kaupthing had a significant operation in the UK and its collapse left a string of creditors owed money, with many local authorities and charities among those that lost money.

PA