The property developer Vincent Tchenguiz will receive at least £6m and an apology from the Serious Fraud Office (SFO) following the collapse of an investigation against him two years ago.
The settlement for damages and costs relates to an investigation in to the troubled Icelandic bank Kaupthing, which went under during the 2008 banking crisis. Tchenguiz's brother Robert is still in talks over an agreement with the SFO and is
continuing to pursue his claim for £100m in damages.
David Green, the head of the SFO who inherited the Tchenguiz cases, said: "I am pleased that we have been able to resolve this matter without the need for a costly trial. The SFO deeply regrets the errors for which we were criticised by the high court in July 2012."
The high court ruled that search warrants on the two brothers in March 2011 were illegal and the SFO was later accused by a judge of "sheer incompetence" when it admitted it no clear record of the information used to obtain warrants for the raids.
"On behalf of the SFO I apologise to Mr Tchenguiz for what happened to him. 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," Green said.
Vincent Tchenguiz, whose property investment vehicle is known as the Consensus Business Group, said he hoped the SFO had learned lessons from its mistakes relating to the investigation, which was abandoned in June 2012.
"I have maintained my innocence since day one and this settlement and the apology that I have received from the SFO is total vindication for me," he said.
"I recognise the important work which the SFO was created to carry out and the impact that this litigation had on their ability to fulfil their role. However, I hope that the SFO has learned lessons from this sorry episode in its history and the serious and significant errors which led to my investigation and arrest are never repeated."
The payout includes £3m in compensation. Vincent Tchenguiz is yet to agree the total amount he will receive to cover his legal costs, but the SFO must pay at least £3m towards the final bill within 21 days, bringing the total to a minimum of £6m.
The sums are being underwritten by the Treasury, which had agreed to £19m of emergency funding for the SFO earlier this year to cover the cost of the Tchenguiz compensation claims and so-called blockbuster funding for three other investigations - into Libor rigging, Barclays' fundraising during the 2008 financial crisis and Rolls-Royce.
When Vincent Tchenguiz's home and offices in the upmarket Park Lane area of London were raided in March 2011, they were part of co-ordinated investigation that also targeted former bankers at Kaupthing.
One of Kaupthing's subsidiaries was the British bank KSF, which had an online account known as Kaupthing Edge that had attracted deposits from British savers.
Robert Tchenguiz said his arrest in March 2011 had "an immediate and devastating impact on my family, my business interests and my reputation".
"I intend to continue to pursue this claim through the courts in order to right the wrongs that have been done," he said. Robert Tchenguiz has legal action ongoing in other jurisdictions, including Guernsey, and said he been granted an application to consider whether he could use 55,000 documents disclosed by the SFO in connection with his claims.
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