Turkish Economy Shaken By Corruption Revelations
- Washington Post - By Molly Moore
- 30/12/2000 00:00:00
ISTANBUL, Dec. 29 -- The nephew of a former Turkish president was jailed when security cameras caught him toting suitcases -- allegedly filled with cash -- out the back door of the bank he owned, hours after his uncle learned of a secret government operation to seize the failing institution.
The brother-in-law of the same ex-president, Suleyman Demirel, is under investigation for allegedly renting a herd of horses and buying a fake land title to trick government authorities into reclassifying part of a state-owned Istanbul forest into his private development site for 1,150 villas.
In a series of exposýs that have stunned even this corruption-fatigued nation, some of Turkey's top business and political figures have been implicated in scandals that have shaken the foundations of the economy.
The revelations have made Turkey the latest example of a disturbing international trend among developing nations, from Mexico to India to Russia, as they attempt to gain a foothold in the world marketplace: Government privatization and commercial globalization have dramatically increased the spoils of corruption and cronyism, raising the stakes for emerging economies.
"Since the end of the Cold War, corruption has emerged on the international agenda as one of the most significant transnational issues of our time," the Washington-based Center for Strategic and International Studies said in a new report analyzing corruption in Turkey and elsewhere.
At a time when Turkey is campaigning for membership in the European Union, the stakes have become treacherously high, prompting the government to take unprecedented steps to expose high-level corruption after what officials acknowledge were years of ignoring or covering up fraud by politicians, bureaucrats and business leaders.
The nation's senior leaders, from President Ahmet Necdet Sezer to the Turkish National Security Council, have called for all-out war against corruption. Interior Minister Saadettin Tantan, a former police chief, has become a national hero for his crusade against corruption and his outspoken assaults on some of the country's most powerful figures.
"The architects of the irregularities have been presented to the public as respectable people," Tantan said recently. "Don't let a pack of vultures change the country's agenda."
In its most recent report on Turkey's progress in gaining admittance, the European Union harshly criticized the country for its lack of progress in the "fight against fraud and corruption" in government. Although human rights issues have dominated European headlines in Turkey's quest for EU membership, potential investors and many European leaders consider corruption one of Turkey's main obstacles to admission.
"There is a growing awareness in Turkey that corruption is hurting us not just morally, but economically," said Baran Tuncer, an economics professor and former World Bank official who is active in the Turkish chapter of Transparency International, a group that monitors corruption levels for international business. "The whole banking system may collapse, and as a result, the whole economy can go into the wastebasket."
In the past year, government prosecutors have launched dozens of investigations. "Operation Hurricane," an investigation into banking irregularities, has been the most far-reaching probe, generating investigations into more than 100 of the most powerful and politically connected businessmen and resulting in the imprisonment of more than three dozen.
These include Yahya Murat Demirel, nephew of the former president, whose term ended in May. Demirel is in prison on charges of siphoning millions of dollars from his collapsing Egebank in the hours before the government took it over in late 1999. Investigators allege Demirel and other bank officials used the institution to obtain tens of millions of dollars in fraudulent loans that contributed to the bank's demise.
Demirel has denied any wrongdoing, and the former president has denied allegations that he tipped off his nephew to the pending takeover. An Istanbul police official has been arrested on charges that he informed Demirel of the secret operation.
"Operation Whale," "Operation Poison" and "Operation Parachute" targeted a phantom export racket and tax evasion scams, which resulted in the arrests or firing of scores of tax and customs officials.
Even so, the government has had limited success in bringing corrupt officials and businessmen to justice because of inadequate laws, an antiquated court system and few independent regulatory agencies. Nejat Coskun, chairman of the Finance Ministry's Financial Crimes Investigation Council, said that in four years, not one investigation by the agency has sent anyone to prison on a money-laundering conviction.
The cases of two people convicted in a $5.2 million money-laundering scheme two years ago are pending before the Supreme Court and would become the first successful prosecution if the court upholds the conviction, he said. Coskun said the complexity of the cases, as well as Turkey's tradition of an informal economy with few paper trails and inadequate laws, has hampered the investigations, which number 370 active cases.
Turkish newspapers -- most of which are owned by a few wealthy families -- fill many columns daily with tantalizing tales of fraud and misdeeds. But Fikri Saglar, former chairman of a parliamentary committee that investigated corruption, noted that investigations are frequently used to blackmail political or business rivals.
Although Turks are increasingly fed up with the corruption that permeates their daily lives, the greatest impetus is coming from outside the country, according to Can Paker of the Turkish Economic and Social Studies Foundation, a research organization conducting a nationwide citizen survey on the impact of corruption.
"Because of globalization, Turkey now has to compete with the world," said Paker. "That is forcing Turkey into a new direction."
- Washington Post - By Molly Moore
- 30/12/2000 00:00:00