Accountants Grant Thornton “had direct interest” in the arrest of Vincent and Robert Tchenguiz in March 2011 which should have been known about beforehand.
This conclusion has been overlooked in the media coverage of yesterday’s High Court ruling into the debacle of the Serious Fraud Squad’s handling of the investigation.
The judicial review into the arrests, where the Tchenguiz were represented by Lord Goldsmith, a former attorney general, and Lord MacDonald, a former Director of Public Prosecutions, runs to 64 pages and is perhaps the most costly prose to have been published this year.
The SFO “relied very heavily on the work and conclusions of Grant Thornton”, according to the High Court, but when search warrants were authorised by Judge Paul Worsley, he was told “nothing about the role of Grant Thornton in the allegations”.
The judge should have been “alert to any possibility that the SFO was being used to promote the interests of one party to civil litigation”.
Grant Thornton, acting as administrators for the collapsed Icelandic bank Kaupthing, cried foul after mistakenly believing that the Tchenguiz had obtained £100 million loans on retirement development freehold assets that were already pledged.
The judicial review established that in no less than six places these superior agreements were made clear in the so-called “Pennyrock Loan”. In short, Tchenguiz was not hiding anything.
Acting for Vincent Tchenguiz, Lord Goldsmith, the former New Labour attorney general, argued that “the judge should have been told of that fact and of the fact there was litigation between Kaupthing and the companies controlled by the Tchenguiz Family Trust in which Grant Thornton were acting for Kaupthing”.
The High Court added: “It was contended that Grant Thornton had a direct interest in the civil proceedings because of the allegations made against them in respect of their actions as receivers … Therefore the judge should have been put on notice so that he was alert to any possibility that the SFO was being used to promote the interests of one party to civil litigation.
“We consider that submission to be well founded. This is a case where it appears that the SFO relied very heavily on the work and conclusions of Grant Thornton.
“In the absence of independent verification by the SFO’s own independent experts of those conclusions, it was essential that the judge be told of the extent of the interest of Grant Thornton in relation to each transaction.
“Grant Thornton may have been right, but the judge needed to know of their interest and the lack of independent verification of their conclusions.”
Grant Thornton did not provide evidence to the judicial review and the High Court noted: “They declined in answer to a request from Vincent Tchenguiz to make available the evidence on which such serious allegations were advanced to the SFO.”
In the event, Grant Thornton failed to find a buyer for the retirement development freeholds and quietly sold them, and a number of other assets – including the freeholds of St George Wharf, Vauxhall, and Charter Quay, in Kingston – pledged against the Oscatello loan, back to the Tchenguiz Family Trust in September last year.
In short, Grant Thornton undermined the process that it had started a full nine months before the SFO investigation into Vincent Tchenguiz collapsed.
The SFO investigation into Robert Tchenguiz continues
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Tchenguiz falls out with his ex-Israeli intelligence operatives … and now they are suing each other
Tchenguiz brothers fall out among themselves, says The Times
Tchenguiz’s Israeli ‘military intelligence’ operators Black Cube ‘were employed by Harvey Weinstein over sex accusations’
ARMA-Q members to be revealed next month
