A THREE-YEAR investigation by British fraud authorities into the collapse in 2008 of Icelandic bank Kaupthing, which forced London to compensate hundreds of thousands of British savers, has been abandoned by the Serious Fraud Office (SFO).
The decision was expected after it dropped a case against London-based property billionaire Robert Tchenguiz last month – an outcome that has seriously damaged the SFO’s international reputation.
However, the decision goes further than dropping inquiries into Mr Tchenguiz and his brother, Vincent, since it means that the SFO will also end its probe into the methods used to encourage British savers to lodge money with the bank during the credit boom.
“[The SFO] has today discontinued the investigation into the circumstances surrounding the collapse of Icelandic bank Kaupthing HF on the grounds that there is insufficient evidence to justify its continuation,” it said.
In March 2010, police and SFO investigators raided the homes of Mr Tchenguiz and his brother, along with a number of British-based executives of Kaupthing, which grew rapidly on the back of short-term lending on international money markets.
However, the SFO’s case against Vincent Tchenguiz came apart earlier this year when it emerged that investigators had claimed that they had grounds for suspecting him of wrongdoing, even though they did not.
The SFO investigation was prompted after large sums of money were taken out of the Icelandic bank in the days before it collapsed in 2008. Vincent Tchenguiz borrowed £100 million from it shortly beforehand.
In December 2009, the SFO said it would probe suspected fraud offences that were committed within the UK jurisdiction prior to the bank’s collapse during the financial crisis in October 2008, particularly the pitch made to savers to invest in a high-yield account.
Even though the investigation has ended, the director of the SFO, David Green, said that it would continue to co-operate with the special prosecutor’s office in Reykjavik. In July, investigations into two of Kaupthing’s UK executives, Armann Thorvaldsson and Gudni Adalsteinsson, were ended.
The Tchenguiz brothers are now set to launch compensation bids against the SFO, along with a damages claim against Kaupthing, which was taken over by the Icelandic government in October 2008, along with two other domestic banks, Landsbanki and Glitnir.
