The flamboyant property tycoons Vincent and Robert Tchenguiz are poised to sue accountants Grant Thornton for up to £2.5bn over the firm's evidence which was used against them in the botched Serious Fraud Office investigation.
Their claims followed a judgment yesterday ordering the accountancy firm to release the documents that triggered the SFO's dawn raids on the brothers two years ago.
The order is significant because the brothers believe evidence contained in the hundreds of pages of papers will strengthen their claim for damages against the SFO and Grant Thornton. They believe the documents will prove their arrests were groundless.
The Iranian-born pair have been trying to get hold of the Grant Thornton reports for months but had faced blocks from the accountancy firm's legal team.
However, Judge Henry Bernard Eder rejected the firm's claims, saying disclosure of the reports was "necessary and appropriate".
A court has already declared that the arrest warrants were obtained unlawfully, and the affair has proved to be one of the most embarrassing yet to hit the SFO.
The brothers are waging a £300m battle against the SFO and, according to yesterday's judgment from Justice Eder, £2.5bn-plus against Grant Thornton employees Stephen Akers and Mark McDonald.
Mr Akers, a partner in the firm, and Mr McDonald, a director, were acting as liquidators for the collapsed Icelandic bank Kaupthing, which was at the heart of the SFO's allegations against the Tchenguiz brothers.
Vincent Tchenguiz said: "This is a crucial and immensely significant judgment. It is clear that Grant Thornton initiated, and played a significant role in, the SFO's misguided investigation into me and in the SFO's unlawful gain of warrants which led to my arrest and the massive financial loss which stemmed from the SFO's actions.
"These five reports, which the judge has ordered be disclosed, appear to have been pivotal in the SFO's flawed inquiry. We will now be able to ascertain exactly what was in these reports – which appear to have led the SFO to mislead a judge."
A spokesman for the Mr Akers and Mr McDonald said that they intended to appeal against the judgment.
Vincent Tchenguiz said he looked forward "at last" to seeing what evidence Grant Thornton showed to the SFO to prompt its raids.
The SFO dropped its probe into Vincent Tchenguiz in June last year and scrapped its investigation of Robert in October as its director, David Green, sought to draw a line under the bungled investigation, which senior judges had criticised for its "sheer incompetence".
For Grant Thornton, the judge's decision is a huge blow. It had claimed the reports should be kept secret due to reasons of client confidentiality.
The brothers are jointly seeking damages after they were taken into custody in 2011 over the failure of Oscatello, their British Virgin Islands company. Oscatello was put into liquidation during the financial crisis after the collapse of its backer, Kaupthing.
Glamour couple: The rise and fall of a property empire
Until their arrests, the Tchenguiz brothers were best known for their love of supercars, yachts and glamorous girlfriends. Their parties were legendary among the international property elite. Robert invited 500 of his closest friends to his 40th birthday party on the theme of Louis XVI and famously dated Caprice Bourret, the lingerie model, while Vincent seemed to have a different woman on his arm every time he graced the gossip pages. "I am single, so I can live it up," he has said.
They trace their family back to a wealthy Iraqi-Jewish heritage, although the Tchenguizes left Iraq in 1948 and moved to Iran. The family left for Britain when the Shah was toppled in 1979.
The pair started building their fortune in London in the 1980s, working as financiers before setting up their own property business, Rotch, with which they bought £4bn of property, fuelled by £3.5bn of debt. Often they purchased the sites with 100 per cent debt.
Their empire stretched to 800 office buildings and 300,000 homes at its peak. But it all started going wrong when the credit crunch struck. Robert was particularly hard hit as he was forced to sell stakes in businesses at the bottom of the market to service his debt obligations. He hit rock bottom when the SFO raided his home, but a series of legal victories in his fightback has seen him reverse some of his slide. Little wonder he was so jubilant yesterday.
Icelandic eruption: UK consequences
The Icelandic bank Kaupthing goes into administration with debts 10 times the size of Iceland's GDP
SFO inquiry into bank's collapse
The Tchenguiz brothers – among the bank's biggest borrowers – are raided by the SFO and arrested; both are released without charge and vow to clear their names
The SFO admits data used to get warrants had "factual errors"
High Court grants the Tchenguiz brothers a judicial review into the raids and arrests
The SFO drops the investigation into Vincent Tchenguiz
The SFO drops the investigation into Robert Tchenguiz
The Tchenguiz brothers launch legal action against the SFO