Fashion designer among about a dozen entrepreneurs and bankers to have been questioned by prosecutors from Reykjavik
Fashion designer Karen Millen is among about a dozen UK-based entrepreneurs and investment bankers questioned by criminal prosecutors from Reykjavik during a week-long visit to London, in connection with several inquiries into alleged market manipulation at the failed Icelandic bank Kaupthing.
In common with all those questioned, Millen is not believed to be a suspect but may have become unwittingly involved in trades in which market manipulation was allegedly orchestrated by top bosses at the bank. Bank managers deny wrongdoing.
Millen and her ex-husband, Kevin Stanford, who now runs fashion chain All Saints, are believed to have unwittingly become caught up in an alleged effort to manipulate the price of Kaupthing credit default swaps (CDSs) in late 2008. The prices of these credit derivatives – effectively, insurance contracts against Kaupthing going bust – were closely watched, as investors saw them as an important indicator of the bank's creditworthiness.
At the heart of the investigation are offshore investment vehicles stuffed with loans from Kaupthing that were nominally controlled by a handful of Kaupthing's largest clients, including Millen and Stanford. Investigators are looking at whether these vehicles were in fact used by Kaupthing executives to manipulate the price of CDSs and give a false impression of market confidence in the bank.
Many of Millen's investment interests remained closely linked to those of Stanford long after they split in 2001. Stanford had become a large customer of Kaupthing by 2008, as well as being its fourth largest shareholder. He was not interviewed by Icelandic authorities, despite previously accusing the bank's former management of market manipulation.
Stanford remains in a long-running legal dispute with Kaupthing administrators involving claims and counter-claims for hundreds of millions of pounds.
Also among those questioned by Icelandic investigators were bankers who had worked at Deutsche Bank in 2008, when the German group is said to have advised Kaupthing executives on CDS activities. The German bank has confirmed it is co-operating with investigators.
The inquiry into alleged CDS price manipulation had been actively pursued in the UK by the Serious Fraud Office, but the agency has since shifted the focus of its inquiries into Kaupthing elsewhere.
In March last year, the SFO and Icelandic prosecutors co-ordinated raids on homes and businesses linked to several Kaupthing bankers and the bank's largest clients, Mayfair property tycoon brothers Robert and Vincent Tchenguiz. All interviews by investigators from Reykjavik last week took place at the SFO's London offices.
Among those who attended were UK-based property investors Moises and Mendi Gertner. The brothers became the owners of a 2.5% holding in Kaupthing, but investigators are examining how the investment was financed. There is no suggestion of wrongdoing on the part of the Gertners.