Turkey Opposition Calls for Investigation on Central Bank Corruption Claims

Published March 28th, 2021 - 12:30 GMT
Turkey Opposition Calles for Investigation on Central Bank Corruption Claims
In the past two years, Turkey has replaced its central bank governor three times, triggering market instability and scaring off foreign investment. (Shutterstock)
CHP calls for audit, investigation into high-profile dismissal of Naci Agbal
Turkey’s main opposition Republican People’s Party (CHP) has called for a parliamentary investigation into the ousting of the central bank governor amid rumors of profiteering and corruption.

The CHP demanded the government reveal the amount of public money lost and the names of officials said to have benefited from foreign currency fluctuations between the announcement of interest rate hikes on March 18 and the dismissal of Naci Agbal two days later.

The request was initiated by 16 MPs from the party.

In the past two years, Turkey has replaced its central bank governor three times, triggering market instability and scaring off foreign investment.

Agbal, who was appointed in November last year and hailed as a “competent” figure, was dismissed two days after he proposed a larger-than-expected increase in interest rates.

“The central bank and all other banks have the list that contains the name of those who profited from the currency fluctuation. It is an organized move and 83 million Turkish citizens should know who benefited from that abrupt dismissal. Those who leaked this sensitive information should be revealed immediately,” CHP Istanbul MP Gursel Tekin told Arab News.

Tekin also called for Turkey’s Financial Crimes Investigation Board to audit transactions made during the period.

Credit rating agency Moody’s said on March 25 that Agbal’s dismissal “hurt investor confidence in Turkey.”

Last week, Ali Babacan, leader of the opposition DEVA party and former economy chair in the government, drew attention to the allegations surrounding Agbal’s dismissal.

Babacan said that Agbal might have been dismissed at midnight because he was planning to investigate the sale of $130 billion in foreign exchange reserves during former finance minister Berat Albayrak’s tenure.

“We do not know if this is true, but I would not be surprised if it was the case,” he said.

The Turkish central bank’s foreign currency reserves have fallen 75 percent over the last year and now stand at a mere $11 billion.

Agbal’s dismissal resulted in an 11-percent depreciation of the Turkish lira against the US dollar after the appointment of Sahap Kavcioglu as new governor.

Kavcioglu is a well-known advocate of lower interest rates, and will likely shape a new approach that works in the government’s favor.

However, economists warn that if the bank reduces interest rates, foreign exchange rates will spike further and a balance of payment crisis will emerge.

The opposition IYI Party announced on March 22 that it was planning to submit a legislative proposal to Turkey’s Parliament to establish a five-year minimum term for the position of central bank governor.

Meanwhile, Turkey’s stock exchange Borsa Istanbul named Korkmaz Enes Ergun, previously deputy general manager with 24 years’ experience in the sector, as new managing director.

Ergun replaces Hakan Atilla, a controversial figure who was sentenced to 32 months in prison in the US for helping Iran evade sanctions in his role at Turkey’s state-run Halkbank.

Atilla resigned from his post on March 8.

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