Turkish whistleblower: government can hand over any bank to state fund

Published February 22nd, 2015 - 06:35 GMT
Avni was referencing the justification of the seizure of the management of Bank Asya, the country's largest Islamic lender, in a midnight operation on Feb. 3.
Avni was referencing the justification of the seizure of the management of Bank Asya, the country's largest Islamic lender, in a midnight operation on Feb. 3.

A government whistleblower who tweets under the pseudonym Fuat Avni argued on Tuesday that most lenders in Turkey are vulnerable to being seized by the government and transferred to the Savings Deposit Insurance Fund (TMSF) due to potential ambiguities in their partnership structures. 

Avni was referencing the justification of the seizure of the management of Bank Asya, the country's largest Islamic lender, in a midnight operation on Feb. 3. 

The whistleblower pointed to the fact that the country's banking watchdog, the Banking Regulation and Supervision Agency (BDDK), required 182 shareholders of Bank Asya to submit documents pertaining to personal and corporate entities to the agency within 45 days. 

For many, the arbitrary and unreasonable nature of the request suggested the government was taking another step in a prolonged smear campaign against the bank, arguing that it is virtually impossible for so many individuals to retrieve documents from public institutions and deliver them in such a short time. 
The CEO of Bank Asya said on Feb. 6 that the banking watchdog had requested around 20 different documents from 185 A-type shareholders -- dubbed privileged shareholders -- including criminal records, audited financial records, tax records for five years, property records and accounts in other banks for personal and corporate entities. 

Since most of the shareholders failed to submit those documents to the agency, the BDDK ruled that management control of 63 percent of the privileged shares of Bank Asya be transferred to the TMSF, citing a lack of transparency in the organizational and partnership structure of the lender. 

Fuat Avni, however, argued in posts on Twitter on Tuesday that 80 percent of the bank's shareholders had already sent the documents to the watchdog by the time of the midnight raid on the headquarters of the lender; however, the BDDK did not accept them and instead authorized the takeover. The whistleblower -- who claims to be in the inner circle of President Recep Tayyip Erdoğan and whose revelations have mostly proven to be true -- further claimed that no banks in Turkey, except for one or two, would have met the criteria required by the watchdog in the Bank Asya case. 

"Did the BDDK request all those documents from Rabobank and its partners during its founding process and examine them with the same purpose?" Avni asked, highlighting that the Netherland-based lender has recently been given granted a banking license in Turkey despite the fact that it has thousands of partners and suffers from ambiguities in its corporate structure. 

The whistleblower claimed that the partnership structure of Italy's Interasa bank, which has also recently obtained a license to operate in Turkey, cannot be presented in full to Turkish authorities, according to independent audit reports. 

The structure of ING Bank Turkey, which recently attained OYAK Bank and is partially owned by a company that sells explosives to the outlawed Kurdistan Workers' Party (PKK), is a total riddle, the whistleblower said, referring to a lack of transparency in the partnership of the bank. 

Avni noted that the banking watchdog could not demand similar documents from foreign-funded Citibank Turkey due to its obscure partnership structure. The whistleblower also said if the BDDK asked for documents from Akbank, one of Turkey's largest private lenders, the partners of Citibank would also be required to prepare these documents since Citibank owns 20 percent of Akbank's shares. 

Among other lenders Avni claims suffer from structural ambiguities are Şekerbank; İş Bankası; the owner of Turkey's Finansbank, Greek NBG Bank; and the main shareholder of Turkey's YapıKredi, UniCredit. 

Avni stressed that the recent BDDK operation on Bank Asya has shown that the political authorities in Turkey are able to hand over the management control of any bank in the country to the TMSF and that this power may turn the Turkish banking system on its head. 

Prominent South African economist Chris Hart has commented on the recent developments in Turkey, saying the current economic environment, in which the private sector is perceived as a threat by state institutions, cannot continue as it is. Hart underlined that the government must treat all players in the economy equally, regardless of their private or public ownership.

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