Tchenguiz brothers get their collars felt over Kaupthing

High-rolling entrepreneurs Robert and Vincent Tchenguiz have been arrested by SFO officers investigating the Icelandic bank's collapse.

by Andrew Saunders
Last Updated: 30 Nov 2012

The brothers were detained at around 5.30am this morning, as part of a series of co-ordinated raids by the Serious Fraud Office, the City of London Police and Essex police, working with Icelandic investigators. 135 officers searched a total of eight residential and two business addresses - including the offices of Rotch, the brothers’ Mayfair property investment firm based in Leconfield House, the former home of MI5. Similar operations took place in Reykjavik.

The colourful pair – Robbie once dated Caprice, and is rumoured to have introduced Dodi Al-Fayed to Princess Di - have been arrested as part of the continuing investigations into the collapse of Icelandic bank Kaupthing in early October 2008. Robert in particular is unlikely to forget the date in a hurry as he lost an eyewatering £1bn in 24hrs as a result, as the desperate bank called in the money it had loaned his businesses.

Kaupthing, one of three Icelandic banks to collapse during the credit crunch, had a substantial UK presence, having bought staid British outfit Singer & Friedlander in 2005. It became one of the most aggressive lenders at the peak of the ‘free money’ boom of 2006/2007, and its failure didn’t just leave the Tchenguiz strapped for cash. Many private savers, local councils and charities were also out of pocket, leading to calls for the Icelandic government to pick up the tab. Hence the considerable political pressure from both countries for an explanation of what went wrong..

The brothers became known during the private equity boom for their mastery of leverage, building a heavily-financed empire based on property worth some £4.5bn at its peak which included pubs, cinemas, supermarkets and motorway service stations. Robert is probably best known for his efforts at becoming a corporate raider in the Kirk Kerkorian mould – he built up substantial stakes in both Mitchells & Butlers and Sainsbury’s - but the credit crunch put paid to such ambitions.

Vincent, a keen poker player, once said ‘Poker has taught me about risk-taking. Poker is good for business’ The brothers routinely borrowed most of the money needed to do a deal, using rental or trading income to cover the interest whilst waiting for the value of the bricks and mortar to rise. They were the perfect clients for Kaupthing, and it must have seemed like the perfect bank for them. But a lot can change in three years…

- Click here to read a vintage MT Interview with Robbie during better times

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