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The politicians’ sons, the gold dealer and the pop star: a Turkish tale of corruption 29 décembre 2013

Posted by Acturca in Middle East / Moyen Orient, Turkey / Turquie.
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Sunday Telegraph (UK) Sunday, December 29, 2013, p. 36

Glen Johnson in Istanbul and Richard Spencer

Just a year ago, Recep Tayyip Erdogan was the dominant face of Turkish politics and an important Middle Eastern power broker who was both trusted by the West and open to the East.

He had governed for a decade on a successful mix of devoutly Islamist politics married with financial acumen, friendship with the West, plus business ties with its Middle Eastern enemies such as Iran.

Yet as crisis engulfed his government last week, the flailing prime minister’s formula for success had returned to haunt him as a corruption inquiry threatens to bring his empire down around him.

The threads of the scandal, in which huge sums of cash was seized in dozens of shoeboxes in the homes of the highest in the land, revolve around a lucrative oil and gold trade with Iran.

Large amounts of the proceeds of the trade were found in the boxes at the home of a state bank’s chief executive. More turned up in a row of safes belonging to the son of the interior minister.

The ensuing corruption scandal has compounded a sense that Mr Erdogan has become detached from reality, lost in a myth of his own invincibility.

One MP who resigned last week from his ruling Justice and Development Party (AKP), Erdal Kalkan, said he treated it « as if he owned the place ».

The scandal exploded into the open 12 days ago when, at dawn on December 17, police stormed into some of the smartest suburbs of Istanbul and Ankara.

Among those taken away were Suleyman Aslan, the chief executive of the stateowned Halkbank; Reza Zarrab, an Iranian-Azeri businessman who had taken Turkish citizenship; Mustafa Demir, the mayor of Fatih, an Istanbul district; and Baris Guler, Salih Kaan Caglayan and Oguz Bayraktar, sons respectively of the interior, economy and urban development ministers.

In Mr Aslan’s home, police found shoeboxes crammed with £3.75million in dollars, euros and Turkish liras.

In the apartment of Mr Guler, the interior minister’s son, $750,000 (£456,000) was found in six strongboxes. A note-counting machine was placed nearby.

Leaks to the press served up ever more details. There was the $350,000 (£213,000) Patek Philippe 5101G watch, which an assistant to Mr Zarrab flew especially to Geneva to buy to give to the economy minister, Zafer Cagaylan.

There was the $70million (£42.5million) allegedly lavished on bribes to all the ministers supposedly involved in greasing the path for Mr Zarrab, the gold trade and a raft of business deals.

The raids struck at the heart of the key contradiction of Mr Erdogan’s Middle East policy: while Turkey backed the Arab Spring revolts in Syria and Egypt, it continued to provide a vital lifeline for Iran, the Syrian regime’s biggest supporter.

Iran has long sold oil and gas to Turkey. But as sanctions imposed by America and Europe began to bite on Tehran, the trade became dif-ficult to finance.

In March 2012, Iran was stopped from using the international money transfer system Swift.

To keep the energy imports going, Mr Zarrab, who is said to have been close to the former Iranian president, Mahmoud Ahmadinejad, and his partners devised a clever alternative.

Unable to pay for the oil and gas in dollars or euros, the Turks had to pay in their currency, the lire, which was of little use in Iran. So instead, it was used to buy gold, which was ferried to Dubai – a short trip across the Gulf from Iran.

One investigation found that $2 billion (£1.2 billion) in gold bullion, or about 39 tons, was flown from Turkey to Dubai in August 2012 alone, mostly in the hand luggage of the dealers. The buyers were Iranian and the trade was placed in Dubai to lessen the interna-tional scrutiny.

Turkish newspapers also claim that shell companies were established in China to re-route the cash used to pay for the gold, to further disguise the trade.

Halkbank continues to maintain that its role was legal. Certainly, the gold transfers, though confusing, were legally registered. A bank statement to Turkey’s stock exchange, where its shares slumped in value after the arrest of its boss, said there were no sanctions against trading precious metals with Iran until July 1 this year.

« The source of the funds used in these transactions and the parties to this trade are open, transparent and traceable in the system, » it said. It ceased the trade on June 10, when the United States made public its intention to broaden sanctions to include them, it said. But, according to calculations by newspapers, $8billion (£4.9billion) of gold had already been funnelled to Iran.

Nor was Turkey the only country implicated. India, which also buys oil from Iran, had been let in on the act and was also beginning to use Halkbank.

According to Star, a pro-AKP newspa-per: « India now owes Iran $5.3billion (£3.2billion) in oil debt. India is planning to pay Iran $1billion (£610,000) per month – that is $12billion (£7.3billion) annually – also through Halkbank. »

The trade may have been legal. But the payments paid by Mr Zarrab – using his acquired Turkish name Sarraf – were not, according to the leaks. Mr Caglayan, the economy minister, was paid 103million lira (£30million), they alleged, and Mr Aslan, the bank chief, 16million lira (£4.7million), over two years.

Mr Zarrab, a former money exchange man in Dubai, only started his gold business in 2011. By 2012, he controlled almost half of all Turkey’s substantial gold exports.

In 2010, Mr Zarrab had hit the headlines in Turkey when he married Ebru Gundes, a pop star with several charttopping songs in the country and the star of her own television show.

All this might have been counted as just another corruption inquiry, shocking but not beyond others of its kind.

But Mr Erdogan does not take criticism lightly. In the summer, he reacted with outrage as demonstrators took to the streets complaining about the redevelopment of Istanbul’s historic centre, turning a localised environmental protest into a national crisis. In the wake of the arrests, he lashed out at investigators, journalists and America and Israel, which he said were involved in a plot against him, even as his own son was named as a possible target of the inquiry. Scores of police officers were removed from their posts, including some of those directly involved in the inquiry.

He has also attempted to order that in future all such investigations are notified up the line of command, to prevent such a « surprise » happening again. That order has been blocked by the courts. One of the three main prosecutors was also taken off the case, accused of being behind the leaks to newspapers.

Another high-profile defector, the former interior minister, Idris Naim Sahin, described his old party as an « oligarchy comprising politicians and bureaucrats, whose intentions are uncertain ». He said Mr Erdogan’s response to the inquiry could not « be explained with reason or justice ». Mr Erdogan also turned on a powerful former ally: Hizmet, an Islamic charitable and educational foundation whose members and followers, once natural supporters of the prime minister, are to be found throughout the modern Turkish establishment.

While they were fighting the remnants of Turkey’s former military dictatorship, Hizmet and the AKP worked together. Now Hizmet’s leader, the charismatic scholar Fethullah Gulen, who has never returned from exile in the US, has turned. « Those who don’t see the thief but go after those who chase the thief, may Allah bring fire to their homes, » he said in a televised message clearly aimed at Mr Erdogan.

The prime minister hit back, saying that outsiders – by implication Mr Gulen and his American hosts – were « setting wicked and dark traps in our country, using their local pawns to disrupt Turkey’s unity and integrity ».

It may be the reaction to the scandal that brings the world crashing on Mr Erdogan’s head, rather than the scandal itself.

Oya Ozarslan, head of the Turkey bureau of the corruption watchdog, Transparency International, said: « Any action that could be deemed as interference should be avoided. Independent media and impartial judiciary are the most important elements of fighting against corruption.

« However, recent changes in the police forces and public prosecutors breaking out this scandal as well as the changes in the regulation of the police forces leave a number of question marks. »

Local elections are due in March, and a rejection of the AKP would be a severe blow to Mr Erdogan’s standing, already tarnished abroad because of repercussions from his Syrian campaign, with Turkey blamed for allowing foreign funding and fighters to bolster al-Qaeda’s cause over the border at the expense of pro-Western « moderates ».

There are many who accept Mr Erdogan’s explanations, while others who see no alternative; secular politics is divided between Left and Right, and has for years been unable to mount a coherent opposition to the Islamists.

But as riot squads faced off with protesters shouting « catch the thief » in Istanbul on Friday, there is no doubt that Mr Erdogan is rattled.

Erden Erdem, a political researcher at Ankara’s Hacettepe University, said it was « the most serious challenge that Erdogan has faced while in power ».

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