November 15, 2012 / 7:16 PM / 5 years ago

UK fraud squad faces $4.8 mln Tchenguiz legal bill

LONDON, Nov 15 (Reuters) - Robert and Vincent Tchenguiz, two of Britain's best-known property entrepreneurs, have won the lion's share of their multi-million pound costs in a legal battle against the Serious Fraud Office over a bungled probe.

The decision, which was handed down on Thursday, could see the SFO pick up a tab of up to 3.0 million pounds ($4.8 million) - 10 percent of its annual budget - in Tchenguiz's legal costs.

Both brothers are also expected to sue the agency for its handling of the case.

The Tchenguiz brothers, renowned for their lavish parties and lifestyles, successfully challenged the SFO's probe into their business dealings with Icelandic bank Kaupthing before its collapse in 2008 in a judicial review in May.

"This is only the first financial manifestation of the folly of the former director of the SFO," said Vincent Tchenguiz.

"His reckless, publicity driven, pursuit of me has caused very substantial damage to my life, family, reputation and commercial interests.

"That damage has yet to be accounted for."

Vincent sent a so-called "letter before action" to the SFO at the end of last year, threatening to seek 100 million pounds in damages from the agency, whose annual budget has been slashed to around 30 million pounds.

He noted that former SFO director Richard Alderman, who left in April, had left taxpayers with a significant liability.

Robert and his brother Vincent were arrested in March 2011 in a blaze of publicity. A judge later declared the search warrants used by police unlawful and the SFO was forced to admit to a litany of errors in its investigation.

Under new SFO chief David Green, the SFO dropped its probe into Vincent in June and its investigation into Robert in October, ending a lengthy and embarrassing episode during which it had been slammed by senior judges for "sheer incompetence". ($1=0.6300 British pounds) (Editing by Mike Nesbit)

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