The Serious Fraud Office (SFO) suffered a serious bloody nose yesterday, after a High Court judge granted the Tchenguiz brothers a judicial review into their arrests and searches of their homes and offices in raids last year.
The three-day hearing has been scheduled for early May and could cast an unflattering light on the law agency's procedures.
Lord Justice Thomas, who has been critical of the SFO before, said that the review should cover the entire conduct of the inquiry into the brothers, which was launched following the failure of Kaupthing, the Icelandic bank. Both brothers had loans with the bank while Robert Tchenguiz was also its major shareholder.
They are already seeking damages of more than £100m for "wrongful arrest" as well as for the searches, but believe that "aggravated and exemplary" damages could now push this much higher.
The arrests were made in dawn raids in March on a day when the colourful brothers had been due to fly out to Cannes to host a party on their yacht at the Mipim show, an annual bunfight for the glitterati of the property world. Tchenguiz parties have become legendary for their glamour and the bevy of beautiful women attending as guests.
Vincent, the elder of the two, has been regularly photographed with one or more of them on his arm, although his brother Robert, the younger and maybe smoother of the Iranian-born pair, has slowed down noticeably since his marriage.
The SFO swooped as part of its investigation into Kaupthing, which collapsed during the financial crisis.
Robert Tchenguiz was its biggest shareholder and a customer, while Vincent had taken a loan out with the bank several months before the collapse. The brothers furiously denied any wrongdoing, and neither has ever been charged.
The waters were further muddied when the head of the SFO inquiry into the Tchenguizs quit just two weeks after the dawn raids, although the law agency said that Mick Randall had been planning to join the private sector for some time and denied his departure was connected to the case.
In December, the SFO faced a further setback when it was forced into an embarrassing climbdown, admitting the warrants should be quashed and returning thousands of documents and items seized during the raids.
A furious Robert Tchenguiz said in a statement yesterday that he had repeatedly offered to co-operate with the SFO.
He added: "My business, my family, and I personally continue to suffer losses as a result of the SFO's unlawful, aggressive and disproportionate action.
"The SFO's conduct has left me with no option but to take legal recourse in order to recover from the extensive financial and reputational damage they have caused, whilst also infringing my civil liberties.
"Irrespective of the judicial review, I am confident that the SFO's investigation will conclude in my favour."
Vincent Tchenguiz declined to comment, but sources close to him said he took a similar view of the situation and had supplied the SFO with the loan agreement which is under scrutiny, which would have cleared him.
The SFO said that it had not opposed the brothers' application for a judicial review into the inquiry.
Property has always been the lynchpin of the Tchenguiz brothers' business empires.
Vincent's various interests are held through the Tchenguiz Family Trust, which he is a beneficiary of and to which his Consensus Business Group is principal adviser.
The elder Tchenguiz brother is one of Britain's biggest landlords, owning the freeholds to close to 1 per cent of the country's residential properties. Almost all are leased out on long leaseholds, but each one will provide a small "ground rent". Together they yield a formidable income.
The portfolio is currently up for sale in a process being conducted by Lazard Brothers, with sovereign wealth funds from the oil-rich nations of the Persian Gulf likely to provide the main bidders. The portfolio has been valued at £3.5bn, although there is £2.4bn of debt secured on the rental income.
The trust also holds a substantial commercial property portfolio, valued at up to £2.3bn, which includes Hilton hotels and Tesco stores. In addition there are numerous other commercial properties, although again some of these have borrowings secured against rental income.
Property, too, is the mainstay of his brother Robert, although in line with the lower profile kept by the younger Tchenguiz, he is more secretive about what he owns. However, he also holds much of his interests through a trust, the Tchenguiz Discretionary Trust, of which he is a beneficiary. His R20 company is also the principal adviser to the trust. However, over time Robert Tchenguiz has held stakes and been involved in the corporate activities of a number of companies. They include Sainsbury's, Mitchells & Butlers and the Lara Croft game company SCi Entertainment. He has also held stakes in Greene King and Marston, Somerfield and the pub chains Yates & Slug and Lettuce. Some of these were lost in the Kaupthing fallout.