British Serious Fraud Office investigators are probing a Bank of Bermuda Guernsey fund that went sour, a national British newspaper has reported.

They are trying to piece together what happened to decide whether an inquiry is needed into who caused the losses suffered by a group of investors and the bank, the report in broadsheet newspaper The Guardian said this week.

The nasty affair began in 1992 when six people pooled their retirement funds with a seventh, former investment banker Henry Fink, for foreign exchange speculation.

The bank recorded the group as having lost money before an attempt to refloat the fund which involved Mr. Fink lodging a 500,000 guarantee.

The Fraud Squad's involvement comes to light just days before the start of the English High Court case in which the Bank of Bermuda's Guernsey arm is suing former client Mr. Fink for a 400,000 guarantee. It is understood Mr. Fink has filed a counterclaim to have the guarantee set aside.

The Guardian reported that the Serious Fraud Office was also understood to be investigating circumstances surrounding Mr. Fink's arrest on suspicion of fraud in July last year.

Suggestions have been made that the very public arrest may have been improper since he was never charged over the affair.

The former investment banker lodged an official complaint against City of London police for their actions.

Bank of Bermuda's court case against Mr. Fink is scheduled to open on Monday.

The financial regulating body in Guernsey, the Financial Services Commission, told The Guardian its own file on the case remained open.

The Guardian also reported this week that two of its previous articles on the legal wrangle included inaccuracies.

Bank fund `probed' "On April 15 and May 25 we published articles reporting that the Bank of Bermuda (Guernsey) Limited was being sued by Henry Fink and two other clients for compensation,'' the correction said. "We said that seven investors each lost one million pounds together with a further 800,000 pounds. This was wrong.

"The bank is bringing an action against Mr. Fink for sums due under a guarantee and there is a counterclaim by Mr. Fink to have the guarantee set aside.

"There are no other parties to this action. We are happy to make the position clear.''