The full extent of Robert Tchenguiz’s relationship with Kaupthing, the collapsed Icelandic bank, have come to light following a state-led investigation. The 2,300-page document reportedly devotes entire sections to Tchenguiz, with his name cropping up more than 100 times, with the Iranian-born property entrepreneur emerging as the biggest borrower of the entire Icelandic banking system. Kaupthing backed some of Tchenguiz’s most high-profile acquisitions including his stakes in Mitchells & Butlers (M&B), Whitbread and Sainsbury’s as well as several deals relating to Somerfield and Laurel, which became Bay Restaurant Group and Town & City Pub Company. The transactions were funded with £1.4bn of debt from Kaupthing. The bank collapsed along with two other major Icelandic banks, Landsbanki and Glitnir, in October 2008 triggering the collapse of Iceland’s financial system and prompting losses of £8bn to British taxpayers. All three banks are now the subject of a criminal investigation into alleged share manipulation, excessive loans to related parties and exaggeration of assets. Incredibly, this week’s report found that Kaupthing – which conducted half of its business from London – secretly owned almost half of its own shares. The report explores its relationships with key clients. It notes a significant increase in loans to Tchenguiz in early 2007 at around the time he became a board member of the bank’s largest shareholder – an investment company by the name of Exista. It described Tchenguiz as a part owner of Exista. Rather than start calling in Tchenguiz’s loans when the market went against his positions in companies like M&B, resulting in margin calls, the bank kept lending its key client more money. In the first nine months of 2008 Tchenguiz borrowed an additional £170m from Kaupthing, Morgan Stanley and Dawnay Day. The report concludes that it is “difficult to see how loans of this magnitude were taken with the bank’s interests in mind”. The bank eventually forced a firesale of the stakes in M&B and Sainsbury’s on the eve of its collapse, prompting heavy losses for Tchenguiz. Its winding up committee in now involved in a court battle with tchenguiz over his £643m stake in Somerfield, the supermarket operator, which was put as collateral for part of the loans. Tchenguiz claims he is a creditor of the failed bank owed £650m and is likely to launch legal action based on the argument that it misrepresented its position, and borrowers had no idea of the scale of the problems at the bank. Tchenguiz steadfastly regards himself as a victim of the crisis – claiming to have lost around £1bn – and says his loans were not against the bank’s rules. Between 2005 and 2008 – between the start of partnership between Kaupthing and Tchenguiz, and the peak of his borrowings, The Sunday Times Rich List estimated that the wealth of Tchenguiz and his brother Vincent more than doubled from £418m and £850m. The report, compiled by a group of Icelandic MPs, says it is not clear why the bank’s patronage was so great. The Daily Telegraph suggests that one theory is that Tchenguiz was a well-placed contact as the bank looked to build its London business. The collapse of Kaupthing is also the subject of an investigation in the UK by the Serious Fraud Office, after the bank set up retail operations, attracting £2.5bn of deposits from UK savers in April 2008.