May 22, 2012 / 5:21 PM / 7 years ago

UK's SFO may back down on "suspect" Tchenguiz

* Brothers targeted by probe into dealings with Kaupthing

* SFO battered by speculation days could be numbered

By Estelle Shirbon and Kirstin Ridley

LONDON, May 22 (Reuters) - Britain’s embattled Serious Fraud Office faces further humiliation over its bungled investigation of property tycoon Vincent Tchenguiz, after saying it will urgently review his status as a suspect.

The agency has already been accused of “sheer incompetence” by a judge over its handling of the high-profile investigation into Vincent and his brother Robert’s dealings with Iceland’s Kaupthing Bank, which collapsed in 2008 under massive debts.

According to court filings seen by Reuters on Tuesday, the SFO concedes it has received accounts from Vincent that present the “potential” to address its suspicions about his dealings with Kaupthing.

“As such, the Director (of the SFO) is not in a position to reach a concluded view as to VT’s (Vincent Tchenguiz’s) status as a suspect in advance of (the court) hearing; but does wish to make it publicly clear that he is conducting an urgent review of that status,” it stated.

The SFO cautioned that the nature of Robert’s relationship with senior Kaupthing executives still needed careful assessment.

A three-day judicial review launched by the brothers into the SFO’s handling of the case kicked off this week in London’s High Court, where Peter Goldsmith, counsel for Vincent Tchenguiz, said the SFO had been lurching from one 11th-hour concession to another.

“That (the court filings) is as close as I have ever seen to a prosecuting authority saying they might well have to stop this investigation,” he stated.

Any decision to drop the case, the SFO’s most ambitious to date, would deal a further blow to an image already battered by a litany of admissions of errors and apologies in the case, and add further fuel to speculation that its days could be numbered.


“I’m afraid the quality of the investigation and the attention to detail you would have expected to be applied has not been applied,” said Raj Parker, a partner at UK law firm Freshfields. But he said the SFO might weather the storm.

“There is the prospect that it (the SFO) will remain, but that it will be ... considerably chastened by yet another debacle in its rather inglorious history.”

The SFO, which also promised to return material seized last year, added it would announce any change to Vincent’s status by 1500 GMT on June 18.

Vincent and his brother Robert, two of Britain’s most high-profile property entrepreneurs, were arrested after more than 135 police and fraud investigators swooped on business and residential premises in London and Iceland last year.

The Tchenguiz brothers have not been charged and have protested their innocence. Their judicial review challenges the SFO to justify its actions, accusing it of unlawful entry, searches and seizures, misleading a judge and abuse of process.

The Tchenguiz investigation, brought under the SFO’s previous director Richard Alderman, comes as the agency has been haemorrhaging staff and faces its first independent assessment by the government’s Crown Prosecution Service Inspectorate. (Reporting by Kirstin Ridley; editing by Andrew Roche)

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