The SFO has agreed to pay Tchenguiz £1.5m plus legal costs before the case reached trial in October, for its part in the failed investigation against him.
The SFO said it “deeply regrets” the errors in its investigation into Tchenguiz and his role in the collapse of Icelandic bank Kaupthing.
The news comes just one week after Robert’s brother Vincent agreed a £3m settlement with the SFO over his £200m case against the watchdog. Vincent is now suing accountancy firm Grant Thornton for its part in the investigation.
Director of the SFO, David Green CB QC, said, "I am pleased that we have been able to resolve this final outstanding matter, without the need for a costly trial. As I said when Mr Vincent Tchenguiz accepted our offer last week, the SFO deeply regrets the errors for which we were criticised by the High Court in July 2012.
“On behalf of the SFO, I also apologise to Robert Tchenguiz for what happened to him. I reiterate that the SFO has changed a great deal since March 2011, and I am determined that the mistakes made over three years ago will not be repeated.”
The Tchenguiz brothers were arrested by the SFO in dawn raids on their homes in March 2011. However, the SFO was forced to drop its three-year investigation into the property tycoons after it admitted to serious failings, and it subsequently dropped the investigation into the collapse of the Icelandic bank.
Following judicial review proceedings in May 2012, the Tchenguiz arrest warrants were quashed and ruled unlawful, and both the SFO and the respondents were criticised in the judicial review judgment.
Their claim was the biggest in the history of the SFO. If the cases had reached trial it could have proved crippling for the watchdog, which earlier this year won emergency funding from the Treasury.
In February the brothers recorded a significant victory in the ongoing battle when two Grant Thornton accountants, central to the case, were ordered to hand over documents relating to the failed investigation.