Vincent and Robert Tchenguiz, two high-rolling tycoons synonymous with Britain’s property boom, were arrested yesterday in a dawn raid by the Serious Fraud Office.
In the boom years Vincent dined at home in Mayfair with Saif al-Islam Gaddafi, son of the Libyan dictator, while Robert dated the model Caprice Bourret and played kingmaker in Qatar’s attempted takeover of the supermarket chain Sainsbury’s.
The businessmen counted themselves as billionaires until their fortunes nosedived along with property values in 2008.
Yesterday they were dealt another blow when they were arrested and questioned as part of a Serious Fraud Office (SFO) investigation into the City’s links to Kaupthing, the Icelandic bank that collapsed in 2008 leaving the Treasury to bail out its British account-holders.
The Tchenguiz brothers denied any wrongdoing. “Both of us are co-operating fully with the investigation and are confident that, once concluded, we will be cleared of any allegation of wrongdoing,” they said in a joint statement.
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The brothers and five other men were taken to Bishopsgate police station in the City of London for questioning. The Tchenguiz brothers were released last night on police bail. No charges have been filed and the SFO’s investigation continues.
Robert Tchenguiz, who left the police station through a back door looking relaxed and smoking a cigarette, declined to speak to The Times.
The raids on the Tchenguiz homes and businesses were conducted in conjunction with two arrests made by Icelandic authorities in Reykjavik.
An SFO spokesman said: “This is a complex investigation which crosses numerous jurisdictions. We have been working closely with the Icelandic special prosecutor’s office to ensure that comprehensive and robust investigations are conducted.”
There was a heavy police presence at the brothers’ offices near Hyde Park yesterday morning. A police van was parked outside one of two businesses believed to belong to the brothers and officers were seen leaving Leconfield House, in Curzon Street, and 5 Curzon Square with black bin-liners.
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The Kaupthing case is the SFO’s most prominent since its prosecution of alleged price-fixing between generic drug companies failed in 2008. Yesterday’s operation involved 135 officers from the City of London and Essex forces. One SFO insider told The Times: “The incident room here is incredible. It looks like something out of World War II with people moving markers around on a map.”
Born to Iraqi parents, Vincent and Robert Tchenguiz and their sister Lisa grew up in Tehran, where their father had a business minting gold coins for the Shah of Iran. In 1979, when the Shah was deposed, the family emigrated to Britain and in the 1980s the brothers used family money to start their property empire.
Both invested on behalf of the Middle Eastern elite in the 1990s and retain close ties to the region, particularly to Qatar and to Libya’s sovereign wealth fund.
Robert Tchenguiz borrowed £1.4 billion from Kaupthing and Vincent £200 million, which they used to fund investments in almost every kind of business.
Robert, 51, bought large stakes in Sainsbury’s and Mitchells & Butlers, the pubs operator, agitating for takeover bids or corporate restructuring. When the deals fell apart, Robert was left holding big stakes in the companies just as the financial crisis was about to send global stock markets plunging.
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In a sign that the family’s finances never recovered from the financial crisis, Vincent recently struck a deal allowing Kevin Maxwell, son of the late disgraced media mogul Robert Maxwell, to share his Park Lane office to help to reduce overheads.
Robert Tchenguiz and his wife, Heather Bird, a fitness instructor, separated last year as his businesses suffered. They still live together with their two children in a four-storey house next to the Royal Albert Hall.
Friends of Robert say that the residence is so large that they can live completely separate lives. More cynical observers say that Robert’s fortune has been wiped out and the arrangement is a financial necessity.
When Kaupthing’s finances started to unwind, the bank seized Robert’s stakes at the bottom of the market, wiping more than £1 billion off his paper fortune.
In 2009 the SFO began an investigation into the links between Kaupthing and its London-based borrowers.The SFO is considering whether the two brothers, who were the bank’s largest borrowers, misrepresented the value of security given to Kaupthing in return for loans. However, a source close to the brothers called the raids “a total fishing expedition”.
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In a parallel case, Kaupthing’s administrators are suing the brothers in the High Court, with the Tchenguiz family counter-claiming £2 billion in damages.
Veni, Vidi, Vici, Vincent Tchenguiz’s 130ft yacht, is moored at Berth 12 at Jetée Albert Edouard in Cannes, awaiting the arrival of its playboy owner. The crew has been primed for Vincent Tchenguiz’s legendary Thursday-night party at the MIPIM property conference in the South of France — an event that usually draws politicians and glamorous women as well as investors. Last night a friend of Vincent told The Times that he still planned to attend.