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Tchenguiz brothers to sue Serious Fraud Office

The Serious Fraud Office was left reeling last night after undergoing a withering attack from the High Court over its bungled dawn raids on the millionaire Tchenguiz brothers.

Detailing a series of errors and misrepresentations in the case, two of the country's most senior judges ruled that the SFO had unlawfully obtained search warrants on the millionaire property tycoons following an investigation into the collapse of Icelandic bank Kaupthing.

The ruling paves the way for more than £100m of compensation claims from the two men, who both said they would sue. It piles huge pressure on the new SFO director, David Green, who instructed staff to drop the case into Vincent Tchenguiz within a week of his arrival in the job.

The brothers were arrested after 6am swoops on their homes and offices last year which were justified by the SFO on the grounds of evidence supplied by the administrator of Kaupthing.

The pair claim publicity surrounding the high-profile arrests meant their businesses suffered huge damage.

The court described as "both unfair and inaccurate" oral evidence the SFO gave to the judge when it was applying for the warrants, and declared "the tone of that evidence was unjustified".

It said the judge would not have granted the warrants if the SFO had given a fairer reflection of the case.

The SFO was also harshly condemned for failing to get adequate independent scrutiny of its evidence.

Robert Tchenguiz, who is still under investigation by the SFO, said: "As a result of the SFO's unlawful actions I and my family have suffered enormous damage, not least to my reputation. I now intend to pursue my claim in respect of the damages I have suffered as a result of the SFO's illegal actions."

Vincent Tchenguiz has pledged to sue the SFO for £100m, and last night talked of "the substantial personal and business costs and losses" he had suffered. "It has taken an inordinate amount of time for this to be resolved … As anyone in business will tell you, time is money."

The ruling found that the SFO had cut corners due to its severe financial constraints. The organisation has since been ordered to make further cuts at a time that it faces large and complex cases.