Property tycoons 'co-operating fully' with investigation into Icelandic bank

Property magnates Robert and Vincent Tchenguiz today said they were "co-operating fully" after being arrested as part of an international fraud probe into the collapse of failed Icelandic bank Kaupthing.

The brothers released a joint statement confirming their arrest in the early hours of this morning and saying they were confident of being "cleared of any allegation of wrong-doing".

They were among seven men arrested in the UK after a string of dawn raids across London in connection with the fall of Kaupthing, one of three Icelandic banks that failed at the height of the credit crunch in October 2008.

The Tchenguiz brothers are among the UK's highest-profile entrepreneurs, having amassed a fortune investing in property and leisure.

They said: "We were arrested earlier this morning and are being questioned with regard to matters relating to our relationship with Kaupthing Bank.

"Both of us are co-operating fully with the investigation and are confident that, once concluded, we will be cleared of any allegation of wrongdoing."

A team of 135 police officers and SFO investigators were involved in this morning's raids, with arrests made after two business properties and eight residential addresses were searched in the London area.

The SFO said those arrested were aged between 42 and 54.

Two men aged 42 and 43 were also arrested in a joint operation in Reykjavik, Iceland.

The SFO said the operations relate to its investigation into the circumstances surrounding the collapse of the banking group.

It announced an investigation into suspected fraud in December 2009 surrounding UK investment in what was advertised as a "high yield" deposit account called Kaupthing Edge.

The SFO said at the time that its investigation would "seek to identify whether misrepresentations or false representations were communicated by the bank in the push to attract UK investors".

Kaupthing had more than 30,000 investors from the UK, it was estimated.

An SFO spokesman said today: "This is a complex investigation which crosses numerous jurisdictions.

"We have been working closely with the Icelandic special prosecutor's office to ensure that comprehensive and robust investigations are conducted, both in Iceland and the United Kingdom, and to ensure that there is no duplication of effort. We will continue to do so."

City of London Police officers were based at the brothers' multimillion-pound offices near Hyde Park throughout the morning.

A police van was parked outside one of two businesses believed to belong to the pair, a street away from the world-famous Dorchester Hotel.

The brothers are thought to have been left heavily exposed to the failure of Kaupthing and were understood to have been among the bank's largest clients.

They are reportedly seeking to get a £2bn (€2.32bn) lawsuit filed against Kaupthing and to be recognised as creditors of the bank, despite the fact that both are said to have owed millions in loans to Kaupthing at the time of its collapse.

Administrators of the bank are believed to have seized a number of their assets in return for the outstanding debt.

Kaupthing had a significant operation in the UK and its collapse left a string of creditors owed cash, with many local authorities and charities among those that lost money.

The Tchenguiz brothers are known as colourful characters in the City, with Robert having once dated model Caprice.

They became aggressive corporate raiders in building up their empire, taking major stakes in supermarket Sainsbury's and pub group Mitchells & Butlers.

But the credit crunch and financial crisis have hit their investments hard.

Uniformed City of London Police officers were seen coming and going from Leconfield House, Curzon Street, and 5 Curzon Square.

Both SFO vehicles and blue police vans were parked outside the sought-after central London addresses.

At one point a police vehicle pulled up with a delivery of several black bin bags.