Gold at center of corruption, money laundering allegations hitting Erdogan's Turkish gov't.

Gold at center of corruption, money laundering allegations hitting Erdogan's Turkish gov't.(HD).

The Republican People’s Party (CHP) Istanbul deputy Umut Oran filed a parliamentary question in July 2012 referring to my column to ask Deputy Prime Minister Ali Babacan about the issue.

Babacan sought to clear the issue on November 2012 with this answer; “We put the money for Iranian gas into Iran’s bank account in Turkey in liras. However, it is impossible for Iran to bring that money to its country in the dollar because of international restrictions and U.S. sanctions. Therefore, Iran withdraws that money from its account and buys gold from the market to bring it back. I don’t how it does so, but this is how it works.”

The claims are saying Reza Zarrab and his team were one of the mediators that used to do what Babacan said he didn’t know and they were earning a great amount of money.

Gold deposits

According to claims, Zarrab needed some convenience support in the transaction of transferring the gold bullion with planes and couriers. Mediator bank Halkbank’s General Manager Süleymen Arslan, Economy Minister Zafer Çağlayan and his son, Interior Minister Muammer Güler and his son and EU Minister Egemen Bağış are claimed to be the ones helping him with citizenship, residence and business permits in return for bribery. 

The Turkish banks’ gold deposit practices, which are presented with an innocent reason of inclusion of under-the-pillow gold into market through economy management, have also been regarded as being a part of these money laundering claims.

It was said there were approximately 5,000 tons of gold with a value of $300 billion under pillows and they were aimed to be drawn to recoded finance.

Banks were allowed to keep 30 percent of the reserves they have to allocate for the Central Bank in gold, which was alluring for them.

The Financial Action Task Force (FATF) describes Turkey as one of the countries that have flaws in its fight against Money Laundering Legislation, along with Indonesia, Pakistan, Syria, Yemen Ethiopia, Ecuador and Nigeria. 

Is it possible the government’s attempts to control the probe through changing investigation officials and regulation amendments to push Turkey from the gray zone to the black zone on the OECD level?

Would Turkish banks face international blockage? It was clear that such a measure would create a great hole in a Turkish economy that is dependent on foreign capital inflow.

Claims of Turkey’s financing and supporting al-Qaida-like organizations in Syria could be added and the Justice and Development (AKP) leadership could face serious accusations. It wasn’t coincidence the U.S. Treasury Undersecretary David Cohen met with banks in Istanbul and discuss Halkbank.Read the full story here.

Related:

The End of Erdogan’s Cave of Wonders: An I-Told-You-So

In June 2012, for example, David Ignatius of the Washington Post bragged that Obama’s embrace of Erdogan had “paid big dividends.” Said Ignatius:

As President Barack Obama was feeling his way in foreign policy during his first months in office, he decided to cultivate a friendship with Turkey’s headstrong prime minister, Recep Tayyip Erdogan. Over the past year, this investment in Turkey has begun to pay some big dividends – anchoring the policy of the United States in a region that sometimes seems adrift.
Erdogan’s clout was on display this week as he hosted a meeting in Istanbul of the World Economic Forum that celebrated the stability of the “Turkish model” of Muslim democracy amid the turmoil of the Arab Spring. One panel had the enraptured title “Turkey as a Source of Inspiration.”

Now the hashish smoke has cleared, Erdogan’s Cave of Wonders has turned back into a sandpit, and the foreign policy establishment has nothing to show for years of propitiation of this Anatolian wannabe except a headache.

Now that Turkey is coming unstuck, along with Libya, Egypt, Lebanon, Syria, and Iraq, we should conclude that the entire project of bringing stability to the Muslim world was a hookah-dream to begin with. Except for the state of Israel and a couple of Sunni monarchies that survive by dint of their oil wealth, we are witnessing the unraveling of the Middle East. The best we can do is to insulate ourselves from the spillover effect.