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Istanbul, Turkey – YouTube videos of convicted Turkish mafia leader Sedat Peker have accused government officials of corruption and caught millions more in recent weeks and critics are reviewing Turkey’s law, saying it provides a proper loophole to launder money and carry out criminal activities.
The “amnesty for wealth” law, which came into force in November, allows individuals and businesses to repatriate previously undisclosed cash, gold, foreign currency, securities and other assets stored abroad or declare assets held in Turkey without incurring tax penalties.
The amnesty advocated by the Justice and Development Party (AKP) is apparently aimed at boosting the economy hit by Turkey’s pandemic.
Former Economy Minister Mustafa Elitas and AK party lawmaker Mustafa Elitas told Al Jazeera that the government did not anticipate how much wealth would come out as a result of the amnesty that would end at the end of the month. But, he said the laws are still beneficial.
“It’s important because it brings in additional hidden sources [of wealth] in our economy, ”he said, calling on the Turks to take advantage of the amnesty.
In March, President Recep Tayyip Erdogan urged Turkish citizens to step out of the shadows of “our national wealth” and invest in supporting the economy.
Experts in financial crime and members of the Turkish opposition say the law is riddled with loopholes that can be used to launder the net profits of criminals.
Under the amnesty, assets can be repatriated from abroad without question. It also allows third parties, legal representatives, corporate shareholders or representative representatives to declare their assets.
This means that assets stored abroad in tax havens can find their way to Turkey through male companies, how they bought them or who bought them. Assets can be taken to the country in a suitcase and indicated without any further inquiries about their origin.
Critics say this opens up for foreign criminals to launder so-called “black” money from Turks.
“Amnesty’s wealth can pose a risk of incurring black money or income obtained through unregistered channels in the system if it does not take appropriate measures, questions the origin of the money or ignores it,” said Transparency International Turkey Chair Oya Ozarslan Jazeera.
“Considering that money laundering requires committing other crimes such as drugs, terrorism, etc. and waiting for access to the system, this risk is important,” he added.
But proponents of the law say such criticisms have no basis.
“That is completely false,” former Deputy Prime Minister Cevdet Yilmaz told Al Jazeera. “All these issues were taken into account when writing these regulations. We focused on issues like terrorist financing and illegal money. We ignored scenarios like this when writing the regulations. As a result, they have no right to make such claims. “
In the autumn of last year, while the law was being drafted, Finance Minister Osman Dincbas, who was ousted in January, dismissed opponents of the amnesty, saying that there are already systems in place to protect against money laundering, including MASS. – the country’s Financial Crimes Investigation Committee – and the Financial Action Task Force (FATF).
How much money, gold, jewelry and other valuables were brought to the country?
Release regulations to attract assets
The Wealth Amnesty, which came into force in November, is the latest version of similar laws passed in 2008, 2013, 2016 and 2018. But previous versions imposed a small tax penalty on exposed assets, while the current law sets zero taxes.
Critics say AK lawmakers have repeatedly released regulations not only to attract assets hidden abroad, but to bring home undeclared wealth from local helpers and disclose assets stored within the country without much scrutiny.
“Nowadays, if someone says they have come to the limit and brought in 30 million euros, all they have to do is fill out the form of the prosecutor and the Financial Crimes Investigation Commission,” said Professor Nedim Turkmen, an expert in international finance. transactions and Turkish tax law at Galatasaray University.
Turkmen noted that under current law, a person can save money in a Turkish bank one day and take it out the next to clean up criminal affiliations.
“What bothers me the most is that this regulation does not bring assets from abroad but rather that illegally unregistered assets in Turkey can be obtained illegally, especially to whitewash whites made by bureaucrats and government officials,” he said.
At the time of the first amnesty in 2008, 47 billion billion pounds (at exchange rates of $ 5.4 billion) were registered as more assets, generating more than 1.5 billion pounds ($ 173 million) in tax revenues. In another blow to transparency, the amount of wealth declared under the current amnesty is not made public.
“We don’t know how much wealth was legalized as a result of recent amnesties and regulations,” said Erdogan Topra, an opposition deputy from the Republican People’s Party (CHP).
“How much money, gold, jewelry and other valuables did they bring to the country? The total value of the assets is no longer available to the public, ”he told Al Jazeera.
Fragile economy
The Erdogan government is in dire need of exchange and other hard assets.
Like the rest of the world, the Turkish economy suffered from COVID-19 blockades and restrictions. But the pandemic plunged into a relatively weak state, thanks to debt-driven growth policies that have made Turkey dependent on foreign financing and weakened whenever investor sentiment turns against its currency.
The lira has lost nearly 20 percent of its value since Erdogan fired the pro-market central bank governor in March [File: Nicole Tung/Bloomberg]
Although Turkey was one of the only countries to experience positive growth last year, the International Monetary Fund recently stated that “the same policies that boosted growth exacerbated existing weaknesses.”
Turkey’s foreign exchange reserves have disappeared, and annual inflation is heading north at 16.5 percent. The lira has lost 20% of its value since March when Erdogan surprised investors by ousting the governor of the pro-market central bank – the third chief to show the door in two years.
Questions about the rule of law and Erdogan’s conflicts with NATO allies, especially the United States, have put pressure on the lyre.
Corruption and gangsters
While his supporters view the amnesty of wealth as a way to boost Turkey’s economy, some critics say it exacerbates the country’s financial problems, easing corruption in those with close ties to the government.
“These are, in fact, government-allied companies and individuals who transferred $ 1 billion in wealth to tax havens to the country and stolen goods from the people,” opposition Democratic Party of Peoples (HDP) MP Garo Paylan told Al Jazeera.
“Corruption, nepotism, grafting and tender plot were used to get them. The AK party is trying to whitewash these illegal assets because it knows it will vote soon, ”he said.
The latest amnesty also comes amid concerns that foreign gangsters are increasingly based in Turkey.
Headlines of murders and armed clashes between foreign mafia groups, especially in Istanbul, are common in the country’s newspapers.
But the problem is not necessarily limited to outside criminal elements. According to former Istanbul Police Chief Adil Serdar Sacan, international mobsters are taking their place in Turkey with the help of local gangsters.
“A member of a foreign mafia would never come to Turkey without the knowledge, guarantees and support of its local partners,” he told Al Jazeera.
“What we see today tells us that certain government circles are already working with the mafia. Mafia leaders are also clearly saying that,” he added.
Those who accused Peker of the crimes denied the wrongdoing. But the videos have further tarnished Turkey’s image already [File: Umit Bektas/Reuters]
Sedat Peker, a former Turkish gang leader, began posting videos in May, denouncing unconfirmed corruption and other criminal acts against government officials, including Interior Minister Suleyman Soylu.
All of Peker’s accusers have refused to do anything wrong. But the videos have further tarnished Turkey’s already damaged image in terms of illegal activity.
Turkey has long seen heroin trafficking on the borders from Afghanistan to Europe, as well as people and weapons. The billions of dollars of these illegal companies often end up in maritime accounts and critics suspect that they are finding their way to Turkey through the amnesties of the country’s wealth.
Turkey has come under pressure from the FATF to tackle a more efficient way of laundering black money. GAIA did not respond to a request for an interview with Al Jazeera.
Some would like to see global sheriffs put more pressure on Ankara.
“Independent international organizations should have more voices on these issues,” a senior Turkish Ministry of Finance official told Al Jazeera on condition of anonymity.
“I really stopped counting the number of these amnesties. That’s enough, “he added.
Former Economy Minister Ufuk Soylemez said the amnesty was also not viewed very badly by law-abiding Turks.
“People who lead honest lives and pay taxes feel hurt by these amnesties,” he told Al Jazeera.
Some say the benefits of the law are white compared to the damage it causes to Turkey’s long-term economic health.
“Due to lack of transparency, democratic deficit and other negative factors, Turkey is no longer a country to invest in,” Toprak said. “This is damaging the image of our country, which is already damaged, and it is scaring away foreign investors.”
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