JON Asgeir Johannesson, chief executive of Baugur, is to face eight charges of fraud after Iceland’s Supreme Court overruled a lower court decision to drop all counts against him.

The ruling partially backs an appeal by the public prosecutor against last month’s decision by the District Court to throw out all 40 fraud charges originally brought against the Baugur chief and five associates. The six deny the charges.

The Supreme Court returned four charges relating to violations of Iceland’s penal code and annual accounts code, allegedly contained within Baugur’s annual reports between 1998 and 2001, to the District Court for consideration. Four charges of customs fraud and falsification of documents relating to the import of cars to Iceland were also returned.

Nearly all the most serious charges relating to fraud over the purchase of yachts in Miami, trading in shares of Arcadia, the UK retailer, and a deal to buy 10/11, the Icelandic convenience store chain, were dismissed by the Supreme Court.

Charges remain, however, surrounding alleged tax avoidance of just over 1 million Icelandic crowns (£8,600) on the import of two cars. Independent lawyers said that these charges, levelled at Mr Johannesson personally, were serious as they suggested criminal intent to falsify documents.

The continuing legal process will be a blow to Mr Johannesson who has vowed not to participate in major public to private deals for the time being.

However, sources close to Baugur pointed out that the eight remaining charges would be considered by the same District Court judges who had previously thrown them out.

Baugur has said that its legal team was considering a “malicious prosecution” lawsuit against the State of Iceland for bringing the “politically motivated” charges. The action would try to recover damages suffered by Baugur as a result of the fraud investigation.

The Icelandic firm was forced to pull out of a bid for Somerfield earlier this year after Iceland’s public prosecutor filed the 40 fraud charges while the initial news of his investigation forced it to drop a planned bid for Arcadia three years ago.

In a statement released late yesterday, Baugur said: “In light of the decision handed down by the Supreme Court of Iceland, Baugur Group wishes to entreat the authorities to cease all further harassment of the company. The company is said to be the victim of the alleged violations but has instead become the victim of a police investigation that has lasted for three years and caused that same company incalculable loss. It is time for this to stop.”