Kaupthing's former Luxembourg subsidiary believed to be among the premises searched
Investigators from the Serious Fraud Office have raided five offices and homes in Luxembourg as part of their investigation into failed Icelandic bank Kaupthing and its biggest client Robert Tchenguiz.
Among the properties searched is believed to be Banque Havilland, formerly part of Kaupthing's Luxembourg subsidiary, which was acquired from administrators in September 2009 by property tycoon David Rowland, one of the largest Conservative party donors.
In a statement, Rowland's son Jonathan, who chairs the bank, said: "The reason for this visit is not related to the activity of Banque Havilland and concerns the former Kaupthing Luxembourg and the ongoing investigations."
It is not the first time Banque Havilland has been searched. It was raided at the request of Icelandic state prosecutors in early 2010. On that occasion the bank and more than a dozen other parties fought a battle through the Luxembourg courts to prevent documents seized being released to fraud investigators in Reykjavik. Two months ago, however, the Luxembourg supreme court threw out attempts to block their release.
Individuals of interest to the SFO today are believed to include Hreidar Már Sigurdsson, the former chief executive of Kaupthing, who has moved from Reykjavik to Luxembourg. He was head of the bank's credit committee. Also in investigators sights is thought to be Magnús Gudmundsson, former chief executive of Kaupthing Luxembourg, who is under investigation in Iceland in relation to alleged market manipulation. Both have denied any wrong-doing.
The raids follow SFO searches of premises linked to senior bankers and businessmen linked to Tchenguiz this month in London and Reykjavik. Those targeted then included brothers Robert and Vincent Tchenguiz and former Kaupthing executives including London-based chairman Sigurdur Einarsson. All deny wrong-doing.At the same time
Robert Tchenguiz's business empire – which, before the collapse of Kaupthing, included big stakes in J Sainsbury and pub group M&B – received about €2bn (£1.75bn) in loans from Kaupthing in Iceland and a further €305m from subsidiaries in Luxembourg and Britain. The total value of loans to Tchenguiz companies had risen to the equivalent of more than 25% of the bank's capital base in early 2008 and a flurry of further lending helped take it to more than 40% prior to the bank's failure months later.
This level of exposure to one group of connected companies is in breach of Icelandic banking laws but the SFO is believed to be seeking to establish whether or not any funds were siphoned off from Kaupthing or its subsidiaries on the instruction of Robert Tchenguiz in the months before the bank collapsed. In addition investigators want to ascertain whether assets pledged as collateral were manipulated. Search warrants on Tuesday were executed with those secured by Icelandic state prosecutors in relation to criminal inquiries in Reykjavik. In total, more than 70 officers are involved in the raids.Kaupthing Luxembourg went bust – along with its Icelandic parent bank and UK sister bank Kaupthing Singer & Freidlander – in October 2008. Luxembourg regulators split its assets into a "good bank" and a "bad bank", with the former acquired by Blackfish Capital, the Rowland family's investment vehicle, less than a year later.
In June last year the Conservative party announced that Rowland, who has given almost £3m in donations, was to take over as party treasurer. Two months later, however, he decided not to take up the post after intense press attention on his past business dealings and private life.