Commercial Crime International
|Istanbul (Ben Morlok)|
Law enforcement and the judiciary are under threat in Turkey amid political wrangling and corruption probes. Thousands of police officers have been reassigned, the deputy of a financial crime unit has been dismissed, and the independence of the judiciary has been brought into question. Crime, smuggling and corruption are all likely to increase unless the political situation improves. Paul Cochrane reports.
Turkey, like much of the Middle East, is experiencing political turbulence and uncertainty. In early 2013, massive demonstrations erupted in Istanbul, ostensibly over the redevelopment of Taksim Gezi Park into a shopping mall, but expanded into protests against the government of the ruling Justice & Development (AKP) Party, which has been headed by Prime Minister Recep Erdoğan for 11 years.
Following the Istanbul protests, the political temperature rose further in December, 2013, when police financial crime units arrested some 50 people for graft, including the sons of three cabinet ministers, the mayor of Istanbul's Fatih district, a construction mogul, the general manager of partly state- owned Halkbank, and Iranian- Turkish businessman Reza Zerrab.
All those arrested had links to the ruling party. Erdoğan claimed the crackdown was a “dirty operation” to smear his administration, and dismissed members of the police force, the head of Istanbul police, and the chiefs of the financial crimes, anti-smuggling, cybercrime and organised crime units. “Nearly 5,000 police officers of different ranks were assigned different duties, and police chiefs of big cities were replaced,” said a Turkish criminologist who wanted anonymity.
Critics accuse Erdoğan of taking advantage of legitimate investigations to install pro-AKP supporters in the police and judiciary. “The rule of law is under threat, and the separation of powers is under threat as the government wants to keep legislative power, especially, under its control,” added the source.
In January however, the Speaker of Parliament Cemil Çiçek claimed there was no independent judicial review of Turkish legislation, while the government passed a law restructuring the Supreme Board of Judges and Prosecutors (HSYK) in February. “Everything is on ice right now due to the current (fraud) controversy. Erdoğan is decimating the judiciary, and there is a lot of collateral damage, with many careers and businesses up-ended if they are suspected of being an ally [of the US-based opposition movement led by cleric Fethullah Gülen]. It's all about power and who runs the AKP and subsequently Turkey,” said Atilla Yesilada, an Istanbul-based analyst at Global Source Partners Inc.
Three elections are to take place over the next two years, starting with local elections in March, but the outcome for judicial independence does not look optimistic given the tensions on both sides of the political divide. “If the Gülen movement wins, many innocents will be put in prison because of corruption accusations, and if the AKP wins, the corruption cases will be dropped,” added Yesilada.
Crime on the rise
With an undermined police force and judiciary, crime looks set to increase. “It is difficult to estimate crime and the sources of new crime that we will come across in Turkey, but definitely it will increase, as will white collar crime and corruption,” said the criminologist.
Of particular concern is that the deputy of the Financial Crimes Investigation Board (Mali Suçları Araştırma Kurulu or MASAK) was replaced in December. “Normally people can inform MASAK of financial crimes but as the root of these financial corruption probes goes back to information provided to MASAK, which is supposed to be independent, this is now under threat with the government interfering in bureaucratic operations. Confidence within the police and public confidence in the police is decreasing,” said the criminologist.
Such enforcement concerns could play into the hands of smugglers, with Turkey a major crossroads between Europe and Asia in the narcotics and human trafficking trades, as well as counterfeit goods, while the country has porous borders with conflict-riven Syria, a turbulent Iraq, and Iran, which remains under heavy international sanctions. Indeed, the Office of the US Trade Representative (USTR) in its 2013 annual review placed Turkey on its 'watch list' for ineffective and inadequate protection of intellectual property rights. “US rights holders continue to raise serious concerns regarding the export from, and trans-shipment through, Turkey of counterfeit and pirated products,” the report stated. Turkey has also regressed in Transparency International's Corruption Perceptions Index 2013, dropping from 49th position in 2012, to 53rd out of 177 jurisdictions. “The commercial crime that is most frequently investigated and therefore that occurs most frequently is bribery, followed by bid rigging, malversation and malfeasance,” said Ms Olgu Kama, a Partner at law firm ELIG in Istanbul.
To address such concerns, in July 2012, Turkey criminalised private- to-private bribery and broadened the scope of both domestic and foreign bribery offences in its legislation to abide by the OECD’s Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.
However, the OECD's Phase 3 anti-bribery review of Turkey, which is to occur this month, may be affected by the ongoing corruption scandal. “The implications of these allegations may be reflected in the report, as Turkey is currently undergoing Phase 3 examinations,” added Kama.
Corporates take care
Away from the current fraud scandal, Kama said that multinational companies (MNCs) are “extremely careful” about their actions in Turkey, primarily due to the need to be compliant with multinational treaties such as the UK Bribery Act.
Assuming the independence of the judiciary and law enforcement survives the current political crisis, Kama said a key reform that would help legitimate businesses work in Turkey is protection for whistle-blowers. And companies can take steps themselves. “MNCs merely using global corporate compliance policy is not enough. Adaptation to the local context should be made. To that end, we advise companies to retain local counsels who are familiar with the Turkish culture,” she argued. Notably, any whistle- blower protection system lacking anonymity “may not work in Turkey, simply because other employees may regard the employee who blew the whistle as a snitch.” As a result, setting up anonymous telephone hotlines for whistleblowers “would be good idea,” said Kama.
However, whistleblowing and journalists investigating commercial crime could be thwarted by government interference in the media. Some 100 journalists have been fired or reassigned since December, while Erdoğan admitted in January that he had made a call to a media outlet to change headlines.
Furthermore, a draft internet bill has been proposed that critics say will censor journalism and social media. "This bill is all the more disturbing for seeming to be an integral component of a series of draconian statements and initiatives by the authorities in recent months,” said Reporters Without Borders in a January statement, while ranking Turkey 154 out of 179 jurisdictions in its Press Freedom Index 2013.