Baugur is planning to sue five individuals in Iceland, including a top politician, a judge and a newspaper editor, over fraud allegations thrown out of court last month.

Several current and former directors of Baugur, including chief executive Jon Asgeir Johannesson and his father, were accused of embezzlement but the charges were rejected by a court in Reyjavic two weeks ago.

Now Baugur, whose British high street interests range from fashion house Karen Millen to toyshop Hamleys, is seeking damages amid claims of political influence-peddling and secret romantic affairs, which it believes have poisoned the island's community against it.