Turkey’s Banking Sector Embroiled in Money Laundering Scandals
A recent report by the Dutch Organized Crime and Corruption Reporting Project (OCCRP) has uncovered a massive money laundering scheme involving Turkey’s second-largest private bank, Garanti Bank. The scheme, known as the “Troika Laundromat,” funneled billions of euros from Russia into the Netherlands through 70 offshore companies with accounts in Lithuania.
Money Laundering and Embezzlement Allegations
The report also highlighted connections between Isbank, one of Turkey’s largest banks, and President Recep Erdogan’s government. In November 2020, the 28% stake held by the opposition Republican People’s party (CHP) was transferred into a single account held by the Government Treasury, effectively giving the government control over the bank.
In addition to money laundering allegations, Isbank has been embroiled in embezzlement scandals. The Anonymous hacktivist group alleged that the bank’s CEO, Ertugrul Senem, has been involved in corruption schemes and illegal money transfers with Berat Albayrak, who served as Turkey’s Finance Minister until his resignation in November 2020.
Conflicts of Interest and Political Interference
Albayrak is also the son-in-law of President Erdogan, raising concerns about conflicts of interest and political interference in the country’s banking sector. The opposition CHP has long accused Erdogan of using state institutions to further his own interests and those of his allies.
Ziraat Bank Implicated in Sanctions Evasion and Money Laundering Schemes
Ziraat Bank, one of Turkey’s largest banks, has been implicated in sanctions evasion and money laundering schemes. In 2010, the bank facilitated the trade of billions of dollars-worth of gold from Turkey to Iran, with Turkish President Erdogan allegedly directing the scheme. The bank’s German unit was recently placed under investigation by Germany’s Federal Financial Supervisory Authority (BaFin) over concerns about loan transactions and its balance sheet.
Timeline
- 2012: Isbank comes under state control
- 2016: Turkish President Erdogan announces plans to change Isbank’s share ownership structure
- 2018: Erdogan initiates legislative proceedings to confiscate Isbank shares from opposition party CHP
- 2019: Garanti Bank implicated in money laundering scheme
- 2020: Berat Albayrak resigns as Finance Minister after allegations of corruption
- 2021: Ziraat Bank’s German unit investigated by BaFin over loan transactions and balance sheet concerns
- 2022: Ziraat Bank declines to comment on BaFin’s investigation
Consequences and Concerns
The scandals have raised serious concerns about the integrity of Turkey’s banking sector and the potential for political interference in financial transactions. Opposition parties have called for greater transparency and accountability in the country’s financial institutions, while government officials have denied any wrongdoing.
This situation highlights the need for increased scrutiny and oversight to ensure that Turkey’s banking sector is free from corruption and abuse.