Vincent Tchenguiz settles record £200m SFO battle for £3m

The Serious Fraud Office (SFO) has ended its record battle with Vincent Tchenguiz after agreeing to settle his £200m damages claim for £3m.

The property mogul and his brother Robert Tchenguiz were pursuing the agency for trespass, wrongful arrest and misfeasance in a public office following their arrest in a botched 2011 SFO investigation.

The agency will pay £3m to Vincent within 14 days and £3m towards his costs within 21 days after reaching the agreement on Friday (25 July). It is still battling a £100m claim brought by Robert Tchenguiz and his investment vehicles.

In a statement on Friday SFO director David Green said: “The SFO deeply regrets the errors for which we were criticised by the High Court in July 2012. On behalf of the SFO I apologise to Mr Tchenguiz for what happened to him.

“The SFO has changed a great deal since March 2011, and I am determined that the mistakes made over three years ago will not be repeated.”

The legal war started in July 2012, when the High Court slammed the SFO for its handling of the Tchenguiz investigation, which collapsed in 2011 (31 July 2012). The agency had carried out dawn raids on the brothers in March 2011 in relation to the collapse of Icelandic bank Kaupthing in 2008.

However the court said the search warrants were unlawful and issued a warning to the SFO, saying it did not have the “proper resources, both human and financial” to investigate the Tchenguiz brothers.

Following the ruling, the brothers slammed the agency with mammoth damages claims leading to two years of extensive damages fights and a legal bill of over £18.5m for the SFO (9 April 2014).The agency was forced to seek £19m in emergency additional funding from the Government this year, in part to cover its legal expenses related to the damages trial.

Robert Tchenguiz’ battle will still run against the agency. Earlier this month he switched counsel from Shearman & Sterling partner Josanne Rickard to Stephenson Harwood partner Sean Jeffrey, who was advising Vincent Tchenguiz (10 July 2014).

The SFO also switched lead counsel this month, instructing Blackstone Chambers’ Pushpinder Saini QC in place of Serle Court’s Dominic Dowley to lead its defence (17 July 2014).

Robert Tchenguiz said in a statement on Friday: ”I was unceremoniously arrested in a dawn raid on the morning of 9th March 2011 by the City of London Police, at the behest of the SFO, on the back of search warrants issued for my home and offices. The media had been tipped off and were present before the police arrived to exercise the warrants. These warrants were subsequently declared unlawful and were ordered to be quashed following a judicial review in May 2012. I intend to continue to pursue this claim through the courts in order to right the wrongs that have been done.”

On 16 July Mr Justice Eder granted Robert Tchenguiz’ application for the appointment of a specialist review team to consider 55,000 documents disclosed in the SFO proceedings for use in a foreign jurisdiction. The claimants want to show dislcosed documents to Guernsey counsel in order to bring new claims against the SFO.

The full hearing will go ahead in October 2014 (6 January 2014).