London court orders Grant Thornton to release reports in Tchenguiz suit

LONDON, July 26 Fri Jul 26, 2013 11:46am EDT

LONDON, July 26 (Reuters) - Accountancy firm Grant Thornton must release sensitive reports to property tycoons Vincent and Robert Tchenguiz, who are waging a 300 million pound ($459.4 million) legal battle against the UK's anti-fraud agency, a London court ruled on Friday.

The Tchenguiz brothers are suing the Serious Fraud Office (SFO) for damages over the agency's botched investigation into the pair's dealings with collapsed Icelandic bank Kaupthing.

The investigation led to the pair being arrested in 2011 in a blaze of publicity, something they say damaged their business relationships and reputations.

The Iranian-born pair have been trying to get hold of reports prepared by Grant Thornton, that court filings show the SFO relied on when it sought arrest warrants for the brothers. A court later said the warrants were obtained unlawfully.

The brothers believe the reports will prove their arrests were groundless and so strengthen their claim for damages.

Lawyers for Stephen Akers, a partner at Grant Thornton, and Mark MacDonald, a director, who together acted as liquidators for Kaupthing, argued that the reports should not be disclosed because they were subject to legal privilege.

But Judge Henry Bernard Eder rejected their claims, saying in a judgment it was "necessary and appropriate" to grant disclosure of the reports.

Akers and MacDonald said they will appeal the decision.

In a statement, Vincent Tchenguiz called Eder's ruling a "crucial and immensely significant judgment".

It may pave the way for Vincent Tchenguiz to take separate legal action against Grant Thornton employees Akers and MacDonald, in a claim that could exceed 2.5 billion pounds, the judgment states.

A spokesman for Vincent Tchenguiz declined to comment on potential legal action. Grant Thornton was not immediately available for comment.

The SFO dropped its probe into Vincent Tchenguiz in June last year and its investigation into brother Robert in October, as its Director David Green sought to draw a line under a lengthy episode during which it had been slammed by senior judges for "sheer incompetence".

Since taking the helm at the SFO in April 2012, Green has been trying to restore the reputation of the fraud prosecutor.

It has launched a criminal investigation into alleged rigging of benchmark interest rates, or Libor, and recently brought charges against ex-UBS and Citigroup trader Tom Hayes, along with two former employees of interdealer broker RP Martin, for their alleged role in the scandal.

It has said it expects to charge more individuals within months. [ID: nL6N0FV3E5]

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