Turkey’s Foray into Financial Corruption

“Those who call it a corruption inquiry are corrupt themselves,” said Turkey’s then Prime Minister, Recep Tayyip Erdogan, now President, in response to a sweeping corruption investigation into his administration in late December 2013. On December 17, 2013, the Turkish police detained 47 people, all allegedly involved in a gold-smuggling network between Turkey and Iran. Those implicated included three sons of Turkish ministers; one mayor; the general manager of Halkbank, the largest state-run bank listed on the Turkish stock exchange; and Reza Zarrab, an Iranian businessman with alleged ties to another Turkish minister and Babak Zanjani, an Iranian businessman who is currently under arrest in Iran on charges of corruption. By the end of the operation, $17.5 million of alleged bribery money had been confiscated, 91 people had been detained, 26 had been arrested, and 14 had been charged with bribery, corruption, fraud, money laundering, and smuggling gold. [caption id="attachment_6590" align="alignnone" width="225"] Thousands of dollars and euros found stashed in safes in the home of a Turkish minister’s son. Source: Radikal Photo[/caption] Zarrab, or Riza Sarraf as he is known in Turkey, had allegedly been bribing officials and Halkbank’s manager to facilitate his gold exporting business. High-ranking officials from Erdogan’s party (the Justice and Development Party, or AKP) were using the scheme, dubbed the “gas for gold” trade, not only to enrich themselves, but also to boost Turkey’s export figures and help Iran circumvent sanctions. Prime Minister Erdogan and the AKP moved quickly in response to the probe; at midnight on January 7, 2014, a new government decree stripped 350 police officers of their positions, including those in charge of the financial crimes, smuggling, and organized crime units. Erdogan and his followers blamed the whole operation on Fethullah Gulen, Erdogan’s prime political rival, and his supposed followers in the police forces and judiciary. In December 2014, the Prosecutor’s Office returned the money seized from top officials, with interest; and in January of 2015, a parliamentary committee consisting mostly of AKP members voted against prosecuting four former ministers implicated in the scandal, three of whom were accused of receiving bribes from Reza Zarrab. Finally, on June 21, 2015, Zarrab received the top exporter award from the Turkish Exporters Assembly on behalf of his jewelry company, Volgam Gida, which currently ranks 13^th on Turkey’s list of exporters. [caption id="attachment_6591" align="alignnone" width="300"] Reza Zarrab (center) received the top exporter award from the Turkish Exporters Assembly on June 21, 2015. Source: Twitter/sedatglmz[/caption] Topcu, a former deputy police chief, explained the Turkish police forces’ motivations behind the probe: “We would be burned later if we decided to bury the investigation. Someone from the department would eventually talk when a different government was in power and we’d face all sorts of criminal allegations for not acting on the evidence we had.” Although Turkey has been known historically as one of the least corrupt countries in the Middle East since its founding in 1923, the country has experienced a wave of corruption scandals since President Erdogan first took office in 2003 as Prime Minister. Even so, Prime Minister and now President Erdogan’s time in office has marked some of the most stable years in Turkey’s short history. President Erdogan instituted a number of successful policies and reforms as the mayor of Istanbul in the 1990s; he has expanded and improved Turkey’s education system, and upgraded the country’s infrastructure. Despite his positive contributions to the Turkish state, President Erdogan is certainly no stranger to controversy. Erdogan first entered the public sphere in 1994 as a member of the controversial Islamist Welfare Party, which was accused of threatening the secularism of Turkey and declared unconstitutional in 1998. Prior to the dismantling of the party, Erdogan recited a poem by Ziya Gokalp at a party rally, inserting the lines, “The mosques are our barracks, the domes our helmets, the minarets our bayonets and the faithful our soldiers…” His interpretation of the poem was declared an incitement to violence and religious or racial hatred. He was sentenced to ten months in prison and banned from politics as a result. Since his official re-entrance to public office in 2003, Erdogan has systematically implemented a series of restrictions on alcohol use, social media, free speech, and the Turkish legal system. Erdogan began to attempt to limit free speech and the powers of the judiciary in earnest after the corruption scandal of 2013—for example, in March of 2014, Erdogan attempted to ban the use of Twitter, presumably for its role in organizing the previous year’s protests. Erdogan has taken a similarly aggressive stance against YouTube, most likely for its role in spreading an audio recording of Erdogan allegedly telling his son Bilal to get rid of tens of millions of dollars. Erdogan’s apparent obsession with the Ottoman Empire has added to growing concern amongst his Turkish opposition, who fear he plans to re-create the empire with himself at the helm. For example, Erdogan greeted Palestinian President Mahmoud Abbas at Erdogan’s controversial Presidential Palace with an Ottoman-style ceremony complete with guards dressed in Ottoman-era costumes; the AKP refers to their supporters as “grandsons of Ottomans”; and a AKP MP Tulay Babuscu has made a number of suggestive comments, including that “the 90-year break” in Ottoman rule had come to an end after Erdogan’s Ottoman-style welcoming ceremony. Erdogan’s stance towards the conflicts consuming Turkey’s neighbors has managed to generate concern in Turkey’s allies as well. A January 2014 scandal involving the National Intelligence Organization (MIT) revealed that Erdogan and the AKP were sending arms to rebel groups fighting in Syria after anonymous calls to the Attorney General’s office resulted in a search of a lorry on its way to the Syrian border. The government initially claimed the searched lorry and a previous lorry were carrying food and medical supplies to the Turkmen population in Syria. In late May 2015, the Cumhuriyet newspaper released footage of the searched lorry that confirmed the government had sent a large quantity of arms and ammunition to Al Qaeda’s and ISIS’ affiliates in Syria. The Cumhuriyet’s footage supported an increasing suspicion amongst Turkey’s usual allies that Turkey was supporting ISIS. After repeatedly refusing to engage in the anti-ISIS effort, Erdogan and the AKP approved air support in July 2015. This alleged air support was immediately confronted with criticism—the majority of Turkey’s airstrikes seemed to be landing on Kurdistan Workers’ Party bases in Iraq rather than in ISIS’ territory. Later in July 2015, these suspicions were somewhat confirmed when an American special forces team raided a compound housing ISIS’ “chief financial officer”, Abu Sayyaf, and found concrete evidence that Turkish officials had dealt directly with ranking ISIS members. All of these factors together with Erdogan’s focus on 2023, the centennial of the Turkish state, and the fact that Erdogan appears to be maneuvering to rewrite the constitution to expand his powers as president, suggest that the AKP may be planning to incrementally increase his hold over the state until the unveiling of a new Ottoman Empire. Regardless of Erdogan’s future plans, every step he takes to further consolidate his own power takes his country one step farther from democracy. This turn towards a more authoritarian state combined with Erdogan’s undiminished pursuit of a successful economy creates ample space for exploitation of his and his party’s newly gained power and privilege—corruption naturally follows. [caption id="attachment_6589" align="alignnone" width="300"] An AKP campaign poster that reads, “Istanbul is Ready, Target 2023.” Source: TechPresident.com[/caption] Despite increasing domestic and international discontent over the scandals and a number of Erdogan’s policies, Turkey is the President of the G20 for 2015, and as such is tasked with advancing the G20’s economic targets and objectives, including the pursuit of anti-corrupt practices across the G20’s member countries. In fact, Turkey’s officially released “Turkish G20 Presidency Priorities for 2015” states: “Fighting corruption is our collective responsibility… [the] Turkish Presidency will…continue to closely work with the relevant international organizations and give particular importance to the fight against corruption in the public and private sector…we will also emphasize transparency in government-business relations…” While Turkey is not alone amongst the G20 in its apparent inability to control corruption within its borders, the rapid spread of corrupt practices in Turkey’s political and financial spheres seem to be closely linked, if not directly tied, to President Erdogan’s errant policies.