Money trail in corruption case

Abdullah Bozkurt
Abdullah Bozkurt


Date posted: February 24, 2014

ABDULLAH BOZKURT

In a January meeting of European Parliament leaders in Brussels with visiting Turkish Prime Minister Recep Tayyip Erdoğan, the vice chairman of the Liberal Group in the European Parliament, Alexander Graf Lambsdorff, said it would be very surprising for a country like Turkey, coming from a modest economic background, not to have corruption considering its rapid economic growth and that in such cases, instances of corruption are more prevalent rather than less.

Lambsdorff’s remarks were a direct response to Erdoğan’s claims that his country has developed significantly with major investments in infrastructure, urban renewal and housing projects in the past decade of his rule. He was challenging Erdoğan’s main argument that if there was rampant corruption, Turkey could not have developed as it did.

I think the German politician hit the nail on the head when he exposed a self-defeating argument raised by the Turkish prime minister to explain the corruption cases that erupted on Dec. 17, 2013, and were blamed by the government on a global conspiracy and its so-called domestic collaborators. It is true that Turkey, as an emerging economy with an export-oriented industrial base and burgeoning consumer market that is hungry for imports, has generated more opportunities for corrupt politicians and their close business associates to exploit lucrative deals and tap into government contracts and tenders. Perhaps that is what Lambsdorff was implying when he countered Erdoğan’s arguments in a closed session in the European Parliament.

However, the massive corruption investigations have revealed something else that is not a typical occurrence in any developing economy. Judging from the prosecutors’ evidence that has been leaked to the press so far, it appears there have been two main sources of cash infused into the Turkish economy illegally and under the radar of financial scrutiny and banking monitoring. One came from Iran, which desperately wanted to circumvent financial, banking, industrial and energy sanctions. The other source was from the Gulf, mainly from the Saudis, who wanted to divert their investments from the Western markets into the growing Turkish economy. While the Gulf patrons have earmarked funds for legitimate investments in Turkey, some of them started funneling cash and arms to the opposition groups in Syria in the meantime. These huge sums of money obtained from Iran and the Gulf in billions of dollars needed to be whitewashed before being legally presented as investments so that the money could circulate in the Turkish economy without raising many eyebrows. That is where the money laundering scheme came into the picture.

Suspects who stand accused of corruption have used real estate development in prime land, mining, retail business and other industries to launder the cash. Since this has involved moving big sums of money through couriers and later via financial institutions after being laundered, they needed the cover and help from politicians who would be able to cut the red tape, bypass rigorous screenings, facilitate cross-border transit and even secure legislative changes in Parliament to create loopholes to their benefit. Both active and retired politicians in this crime network were happy with the fat commissions they charged and lavish presents they received for any help provided for businessmen who had dealt with the dirty scheme. The dragnet generated more than enough cash for the people in government to even create slush funds to finance election campaigns, purchase media groups to establish a friendly press and set up foundations to educate and train foot soldiers for political Islamist ideology.

In the first instance, a treasure trove of cash was provided by Iran, which had been increasingly feeling the pinch of UN sanctions as well as those imposed by the US and the EU. It was alleged that the Revolutionary Guards contracted Iranian Reza Zarrab, the key suspect in the Dec. 17 corruption probe and a naturalized Turkish citizen, and his cronies back in Iran and the United Arab Emirates to run a variety of front companies in Turkey ranging from a company trading in precious minerals (read gold) to a private airline, from a maritime transport company to hospitality and tourism, all aimed at skirting the sanctions regime while laundering money from illegal oil proceeds sold on the black market. According to Turkey’s main opposition party, the government was involved in irregular money transactions, mostly from Iran, that total 87 billion euros. Prosecutors identified three ministers who took bribes of millions of dollars from Zarrab on different occasions in exchange for political favors. The criminal complaint against these three, who later had to resign, is still pending due to their parliamentary immunity.

The second money supplier was alleged to be the Gulf, primarily Yasin al-Qadi, a Saudi businessman and al-Qaeda financier according to the US Treasury. He was on the UN terror list until he was delisted in the fall of 2013. He is reportedly a secret partner in some of the companies in Turkey and has stakes in some investments managed by his son, Muaz. As part of the investigation into al-Qadi’s activities, prosecutors were following his every move while he had been secretly meeting with the top leadership in Turkey including Erdoğan, his son and intelligence chief Hakan Fidan. The abundance of cash supplied from the Gulf was injected into major contracts and tenders as Turkish business tycoons took the money to finance projects in real estate, mining, media, travel, hospitality, health care and other areas.

For example, a report which appeared on the T24 news website in January claimed that Forestry and Water Affairs Minister Veysel Eroğlu helped some businessmen obtain a permit for a mining facility in an İstanbul forest. According to the voice recording obtained by a court-authorized wiretap, a businessman, identified as Adem Peker, was able to secure the license after contacting businessmen Cengiz Aktürk and Osama Kutub, who are both suspects in the corruption probe and close associates of al-Qadi and Prime Minister Erdoğan. Erdoğan reportedly directed Investment Support and Promotion Agency of Turkey (ISPAT) President İlker Aycı to facilitate licensing. In exchange, Peker promised to give the businessmen 50 percent of the mining facility’s shares. In a wiretapped conversation, Aktürk and Kutub are heard discussing plans for money laundering by means of Aktürk’s companies. Aktürk, who owns cosmetics companies, tells Kutub that it was not possible to “launder so much money with perfume” and that they had to find another method. Hence mining was just a front to launder money for these suspects.

There are other trails that prosecutors had identified in a months-long investigation into business moguls’ dealings with Iranian and Saudi businessmen in money-laundering schemes. In exchange for favors, politicians were allegedly provided with commissions on the money laundered. In further phone conversations, this time between Qutb and several other people — including the prime minister’s son, Bilal Erdoğan, and the prime minister’s executive assistant, Hasan Doğan, as well as Energy Minister Taner Yıldız — Qutb informs them about the individuals who might attend a meeting planned for Nov. 9, 2013. No details were available about the content of the meeting, but it appears to have been related to energy.

In a nutshell, prosecutors were able to establish a money trail that was detected in bank wires and trade of precious metals such as gold as well as cash in foreign exchange (using physical and wiretap surveillance) and that implicates senior people in the government. Now Erdoğan’s government is trying to stifle the independent judiciary to hush up these allegations. The prime minister has created a long list of enemies, from the media to the Hizmet movement inspired by Islamic scholar Fethullah Gülen, from business groups to foreign powers such as the US, the EU and Israel in order to shift the blame. Erdoğan forgets, however, that not only did prosecutors in Turkey map out this money traffic, but also other countries that are interested in this money are aware of these long-running schemes that may put Turkey in trouble with its partners and allies.

The fact that the government practically stalled the investigation with a major reshuffle of the judiciary, police, watchdog agencies that track money, and finance and banking activities, while pushing emergency laws through Parliament to prevent further investigations and leaks, casts a shadow on how far the Erdoğan government had gone in these dirty deals. It gives rise to rumors that circulate very fast in Ankara, which is already known as a very gossipy town. An opposition party leader, Masum Türker, even claimed that trucks that were stopped in the border province of Adana in January were not carrying arms and munitions but rather shrink-wrapped bundles of cash and that is why the government was panicked. Another rumor is that Erdoğan allegedly took some of the cash to his plane when he recently embarked on foreign trips to unload the money in foreign banks.

It is difficult to substantiate these rumors, and we may never know if when legal investigations are stopped, evidence somehow disappears. One thing we can conclude, however, is that Erdoğan is in more trouble than it seems. Maybe he thought he had become invincible with the popular mandate his party received in the past three elections, bolstering feelings of impunity, arrogance and greed. With so much cash floating around, it is bound to trigger red flags. Well, it did when the massive corruption scandal broke on Dec. 17. Perhaps that is why Erdoğan has been so angry since then. He takes out his fury on practically everybody when he constantly lashes out at the opposition, media, civic organizations and business groups. He even threatened to expel the US ambassador in Ankara in a public rally speech addressed to thousands of his supporters.

Source: Todays Zaman , February 24, 2014


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