SFO backs down on Kaupthing investigation as two released

THE SERIOUS Fraud Office (SFO) has been forced to drop its investigation into two more people connected with the collapse of Icelandic bank Kaupthing, in an embarrassing climbdown on its most high-profile case.

Former chief executive Armann Thorvaldsson and ex-treasurer Gudni Adalsteinsson have been released from police bail, just weeks after the SFO dropped a separate investigation into tycoon Vincent Tchenguiz’s dealings with the bank.

The SFO confirmed it had ceased the investigation but did not identify the two men.

Thorvaldsson’s lawyer Arnondo Chakrabarti told City A.M.: “Our client is happy to put behind him an investigation that should never have been started.”

The SFO could now face legal action from the pair.

Tchenguiz has already said he will sue the SFO for £100m.

A judicial review into the arrest of Tchenguiz and his brother Robert is currently being decided.

The SFO started probing Kaupthing in 2009 after huge loans were taken out of the bank shortly before its collapse.