The Tchenguiz brothers, more than anyone else, personified the property boom of the Noughties and the financial bubble that made it possible.
During the boom they were everywhere, using the cheap money sloshing around the markets to acquire stakes in a number of leading companies, including a 10 per cent holding in Sainsbury’s, stakes in the brewers Marston’s and Greene King, a holding in SCI Entertainment — publisher of the Tomb Raider computer games — and 27 per cent of Mitchells & Butlers, owner of the All Bar One and O’Neill’s pub chains.
It was this latter holding that was to prove most notorious for Robert Tchenguiz. Using his holding to bring pressure on the M&B board, he tried to make it sell the company’s property assets or hive them off into a separate business. Instead, the board agreed reluctantly to set up a property joint venture with him, putting in place hedges on the money markets to secure its position. However, when the credit crisis blew up, funding for the deal vanished and the hedge taken out by M&B ended up costing the company £400 million. It also cost the chief executive his job, ultimately.
It is not yet clear what the Tchenguiz brothers, who each have an undoubted skill for financial engineering, are supposed to have done. There are suggestions, though, that they may be charged with fraudulently misrepresenting the quality of security they had when taking out loans from Kaupthing, the Icelandic bank.
The situation was made more complicated because, as a commission set up by the Icelandic parliament has established, Robert — a shareholder in Kaupthing — put up his own shares in the bank as collateral when borrowing from it.
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Yet there are also other theories, one of which is that the British Government is desperate to build bridges with Reykjavik, which is still furious at the way Gordon Brown used anti-terrorism laws to confiscate the assets of Iceland’s banks. With a large energy deal with Iceland purportedly in the offing, the theory goes, the brothers would make a sacrificial offering.
The unusually heavy-handed treatment of the pair by the Serious Fraud Office would appear to substantiate that theory.
The brothers have already been through a great deal in one of the most colourful City sagas. Robert famously lost £1 billion in just 24 hours when, in October 2008, he was forced to sell his stakes in Sainsbury’s and M&B as his lender, Kaupthing, scrambled to raise cash.
Yesterday’s events, though, may test even their powers of recovery.