Turkey ignores OECD and GRECO warnings over bribery and corruption

Reza Zarrab, Iranian national who bribed Turkish Ministers in exchange for using Turkish banks to move funds.

Nordic Monitor

 

Turkey is disregarding the latest reports of international organizations that exposed the fact that Turkey has failed to comply with legally binding standards on corruption and bribery.

In March 2019 the Organisation for Economic Co-operation and Development (OECD) officially reminded Turkey of its continued failure to implement key aspects of the OECD Anti-Bribery Convention and to enforce its foreign bribery laws, and announced that the Working Group on Bribery decided to send a high-level mission to Ankara in 2020 unless Turkey takes concrete action by October 2019.

However, the Turkish government ignored the OECD demands and has not taken further steps to deal with the structural problems of its corrupt business system in the last six months. Instead, Turkey’s Treasury and Finance Minister Berat Albayrak, President Recep Tayyip Erdoğan’s son-in-law, unveiled an economic reform program that brought no new regulations to the situation. Due to the latest developments, Turkey may face significant OECD monitoring on bribery conducted by a high-level delegation in 2020.

Furthermore, the Council of Europe’s (CoE) Group of States against Corruption (GRECO) published two reports in June 2019 highlighting a continuing lack of progress on improving the transparency of party funding and preventing corruption among MPs, judges and prosecutors.

Similar to the OECD and GRECO reports, Turkey was ranked the 78th least corrupt nation and scored only 41 points out of 100 according to the 2018 Corruption Perceptions Index reported by Transparency International.

The OECD Working Group on Bribery, established in 1994, is responsible for monitoring the implementation and enforcement of the OECD Anti-Bribery Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the 2009 Recommendation on Further Combating Bribery of Foreign Bribery in International Business Transactions and related instruments. The convention is the first and only international anti-corruption instrument focused on the “supply side” of the bribery transaction, and its peer-review monitoring system is conducted in successive phases (1-4) and is considered by Transparency International to be the “gold standard” of monitoring.

 

Zarrab (C) is seen as he is escorted by police after a medical screening in İstanbul in this December 17, 2013 file photo.

The decision of the working group in March 2019 was due to the fact that Turkey still has not enacted legislation to address longstanding recommendations notably to reform its laws on the liability of legal persons for the bribery of foreign public officials. Turkey’s corporate liability framework has not clearly covered state-owned and state-controlled enterprises, and the prosecution or conviction of a natural person is a necessary basis for sanctioning a legal person, said the group.

The working group also was seriously concerned about Turkey’s low level of foreign bribery enforcement. The group stated that there has not been one foreign bribery conviction in 16 years since the entry into force of the convention in Turkey. In addition, the group was highly concerned that foreign bribery investigations and prosecutions may be influenced by considerations of national economic interest, the potential effect on relations with another state or the identity of the natural or legal persons involved, contrary to Article 5 of the OECD Anti-Bribery Convention. According to Article 5, enforcement investigation and prosecution of the bribery of a foreign public official shall be subject to the applicable rules and principles of each party state and they shall not be influenced by other priorities.

The working group also invited Turkey to report back in October 2019 regarding concrete action to address these issues and underlined the fact that Turkey has not taken steps to address deficiencies stated in its Phase 3 evaluation released in October 2014 under the convention. The Phase 3 report of the working group concluded that Turkey has not amended its law or taken other appropriate measures to clarify that all Turkish legal persons, including state-owned enterprises, can be held liable for foreign bribery.

In addition to the OECD working group, GRECO’s initial evaluation of Turkey’s efforts to criminalise different types of bribery and improve the transparency of party funding, published in April 2010, included a total of 17 recommendations to the authorities. These recently published reports, which are the seventh assessment of Turkey’s progress on implementing those recommendations, indicated that Turkey has still not taken additional action and the results achieved so far are still insufficient and disappointing. The GRECO reports also noted that no tangible progress has been made recently on measures to prevent corruption among MPs, judges and prosecutors.

GRECO, established in 1999 by the CoE to monitor member states, aims at improving the capacity of its members to fight corruption by monitoring their compliance with the CoE anti-corruption standards through a dynamic process of mutual evaluation and peer pressure.

Despite harsh criticism from international institutions, the Turkish media recently claimed that President Recep Tayyip Erdoğan is planning to nominate Hakan Atilla, a former manager at Turkey’s state-controlled Halkbank, for an OECD post. Atilla, convicted by a US court of taking part in a scheme to help Iran evade US sanctions, was released from prison in July 2019. He was greeted at the Istanbul airport by Treasury and Finance Minister Albayrak.

 

Atilla (L) and Treasury and Finance Minister Berat Albayrak.

 

In fact, Atilla was first mentioned in a Turkish indictment in December 2013 that accused a number of businessmen and high-level officials of “bribery, misconduct in office, collusive tendering and smuggling.” Iranian-Turkish money launderer Reza Zarrab, four former ministers of government, the sons of three of those ministers, bureaucrats and a general manager of state-run Halkbank were among those people. Zarrab was a key figure in a 2013 Turkish corruption scandal in which he allegedly bribed four ministers to facilitate sanctions-evading trade and other deals.

Zarrab was taken into custody at the Miami airport while trying to enter the United States and was arrested on March 22, 2016. The US Attorney’s Office for the Southern District of New York indicted Zarrab on charges similar to those filed by Turkish investigators in the December 2013 investigations. One year later, Atilla was arrested by the FBI, in March 2017, and was convicted the following year on five counts of bank fraud and conspiracy following a five-week trial in New York. Atilla claimed that he had only played a minor role in the scheme and acted as executor of instructions given by Halkbank’s director general.

 

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