Property tycoons to sue SFO for more than £200m

The Tchenguiz brothers are to sue the Serious Fraud Office for more than £200m after it scrapped a high-profile investigation into the property tycoons' role in the banking crisis.

Robert and Vincent Tchenguiz were arrested by the SFO in dawn raids on their homes in March last year. However, the agency was forced to drop its case against Vincent in May and Robert in October.

Yesterday's claim for damages at a hearing in London will be the biggest in the history of the SFO and, if awarded, will raise huge questions about its future. It is double the figure that the Mayfair-based brothers first suggested in a letter to the former head of the agency, Richard Alderman.

Alison McDonald, the counsel for Robert Tchenguiz, told the High Court yesterday that her client had filed a claim for false imprisonment against the SFO and was seeking damages in the wake of his arrest.

Rosalind Phelps, for Vincent Tchenguiz, said a claim for trespass had been submitted but further claims were being considered against the SFO for misfeasance in a public office and malicious prosecution, as well as a claim under the Human Rights Act.

The brothers' arrests were part of the SFO's investigation into the collapse of Kaupthing, the Icelandic bank at the centre of the country's financial crisis.

Vincent alone is understood to have claimed £200m, arguing that as a result of the investigation he had to sack about 60 staff and reduce the size of his business to concentrate on fighting the case against him. The damages being sought by Robert are unknown but are also thought to be substantial.

Much of the material used by the SFO was found to be misinformed or misused during a judicial review earlier this year. The High Court hearing starts a 12-month process with a trial expected to be held next October.

The SFO was told last month it must pay the legal costs – expected to be £3m – of the Tchenguiz brothers for the challenge over the dawn raids.