ROBERT AND Vincent Tchenguiz, the high-flying British property entrepreneurs, and seven other people were arrested in the UK yesterday as the country’s serious fraud office stepped up its investigation into the 2008 collapse of Kaupthing, the Icelandic bank.

More than 130 investigators and City of London police officers staged dawn raids on eight homes and two London businesses, including the Mayfair offices of Rotch Property, the investment vehicle that controls the Tchenguiz brothers’ property portfolio.

At the same time, Icelandic police arrested two men and searched two properties in Reykjavik as part of the investigation. No charges have been brought.

In a joint statement, the Tchenguiz brothers 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.”

Kaupthing was one of three Icelandic banks that failed at the height of the credit crunch in October 2008. Robert Tchenguiz, who owned stakes in both the bank and its biggest shareholder, received a total of €2 billion in loans from Kaupthing and its subsidiaries.

The Tchenguiz brothers built up a financial empire specialising in property and leisure, and became famous for their highly geared strategies and swashbuckling style. Vincent Tchenguiz was due to hold a party today aboard his yacht, which is moored in Cannes for a major property conference.– (Copyright The Financial Times Limited 2011)