Turkey is party to six international conventions aimed at combating corruption and corruption-related offences: FOREIGN DIRECT INVESTMENT 1

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1 INTERNATIONAL ANTI-CORRUPTION CONVENTIONS Turkey is party to six international conventions aimed at combating corruption and corruption-related offences: International Anti-Corruption Conventions... 1 Foreign Direct Investment 1 Legislative Framework for Combating Corruption... 1 Enforcement Bodies... 2 Perspectives... 2 Foreign Bribery... 3 Anti-Corruption Initiatives... 3 Legal Profession Input... 4 Recent Enforcements... 4 Recent Developments & News Organisation for Economic Co-operation and Development ( OECD ) Convention on Combating Bribery of Foreign Public Officials in International Business Transactions; 2. United Nations Convention against Transnational Organised Crime; 3. United Nations Convention against Corruption; 4. Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism; 5. Council of Europe Criminal Law Convention on Corruption; and 6. Council of Europe Civil Law Convention on Corruption. Turkey is also a member of the Council of Europe Group of States again Corruption ( GRECO ). Most of the obligations under these international agreements have been codified into the Criminal Code. FOREIGN DIRECT INVESTMENT 1 Total foreign direct investment ( FDI ) stocks in Turkey totalled US$180 billion in The five largest investors were: the Netherlands (21.2%), Germany (9.6%), United States (8.4%), United Kingdom (8.1%) and Luxembourg (7.0%). Regionally, approximately 77% of investments originated in the EU, 12% in developed economies outside Europe, 8.5% in Asia and the Middle East, 2.7% in Latin America and the Caribbean, 1.6% in South-East Europe and CIS, and less than 1% in Africa. Total FDI stocks abroad totalled US$20.3 billion in The largest investments were made in: the Netherlands (28%), Azerbaijan (22.1%), Malta (7.3%), United States (5.0%) and Germany (3.2%). Regionally, 52% of investments were made in Europe, 31% in South-East Europe and CIS, 5.1% in developed economies outside Europe, 4.3% in Latin America and the Caribbean, 2.5% in Africa and 2.4% in Asia and the Middle East. 1 Investment Country Profiles: Turkey, United Nations Conference on Trade and Development, February 2012, available at: (last accessed 6 March 2012). LEGISLATIVE FRAMEWORK FOR COMBATING CORRUPTION Criminal Code, entry into force as of 1 June The Turkish Criminal (or Penal) Code (TCC) criminalises various forms of corruption, including active and passive bribery, attempted corruption, extortion, money laundering and abuse of office. Section 252 specifically creates the offence of bribery, and defines the offence a benefit illegally secured by a public official in negotiation with a person to perform or not to perform a task contrary to the requisite duties of the official. Paragraphs 1 5 of section 252 expand on certain elements of the offence, such as: - criminalising both active and passive bribery (reciprocal offence) and also accepting the negotiation on bribe as the offence of bribery(paragraph 1); - providing for increased penalties with respect to certain types of officials, i.e. judges, notaries and domestic arbitrators etc. (paragraph 2); - defining the offence of bribery (paragraph 3); - extending the offence of bribery to certain categories of individuals who are not public officials (paragraph 4), the scope of the public official definition is extended here compared to section 6/1(c) 2 Published in the Official Gazette dated October 12, 2004 and numbered Available in Turkish at (opens a Word document, last accessed 6 March 2012). 1

2 of the TCC which defines the public officer as any person selected or appointed to carry out public duty for a temporary or permanent period ; and - including foreign and international officials (paragraph 5). A conviction under this offence could result in imprisonment for a term of four to twelve years and the non-public official person who is offering bribe will be sentenced as if he/she were a public officer pursuant to section 252, paragraph 1 and the punishment will be determined taking into consideration the sentencing guidelines in section 61. Section 253 of the TCC, introduces security measures on companies in favour of which the offence of bribery is committed. This is an important concept taking into account the general principle of personal liability governing the Turkish Criminal Code. Accordingly, in case an unfair benefit and bribe is provided in favour of a legal person, the security measures set forth under section 60 of the TCC can be implemented to that legal person (company). A special defence to the bribery offences in section 252 is in question: effective regret (section 254). This defence essentially absolves a briber, or another person who participated in the bribery offence, of liability if he/she informs the competent authorities of that action before an investigation commences. Any bribe given is confiscated and returned to the briber, who is deemed in such circumstances to be exempted from punishment. And the bribe receiver who handles the bribe to the competent authorities before an investigation commences and the public official who negotiates for receiving bribe informing the competent authorities of that action before an investigation commences is also exempted of liability. This defence does not apply to bribery of foreign officials (Article 4 introduced by the Law 5918 amending the Criminal Code in 2009). Various other sections of the Criminal Code criminalise related actions, including: (i) extortion (involving the abuse of duties of the public official and him or her obliging any person to provide him/her unfair benefit) (section 250); (ii) misuse of public duty (request for provision of unfair benefit for a task which the public official should normally do, by not forcing the other party for the provision)(section 257, paragraph 3); (iii) attempted offences 3 (section 35); and (iv) securing a benefit for a task outside the scope of authority of the public official (section 255). Other Legislation with Corruption-related Provisions ENFORCEMENT BODIES The agencies responsible for investigating suspected acts of corruption include the Financial Crimes Investigation Board of the Ministry of Finance ( MASAK ), the Inspection Board of the Prime Ministry (which also advises on a Corruption Investigations Committee), the Court of Accounts, Parliament, the Ministry of the Interior Relations (which encompasses the Directorate General of the National Police and the General Command of the Gendarmarie), and other inspectorates and law enforcement agencies. MASAK was established in 1996 with a special mandate to address corruption. It is mainly responsible for data collection and coordination and has no enforcement authority. Global Integrity 2010 does not consider MASAK an anti-corruption agency as it is heavily influenced by the Ministry of Finance and has little to no political independence. The public prosecutors, organised by province and each headed by a provincial Chief Prosecutor, are responsible for prosecuting cases at trial. They can also initiate their own investigations into allegations of corruption. 3 Attempt to bribery is different from other types of offences; because if the perpetrators of the offence of bribery, the public official and the bribe giver negotiate and conclude an agreement on bribe, the offense will be deemed as completed even before the provision of the benefit as decided. Therefore attempt may be in question when one party offers the bribe and the other party rejects it. Or when the public official demands the bribe and the other party gives it only to have the public official caught; in this scenario the attempt to bribery is valid only for the public official who had the intent to commit the crime and therefore he/she will be liable of his/her acts. 2

3 Turkey has also enacted laws relating to: (i) money laundering (Law on the Prevention of Money Laundering, Law on Prevention of Laundering of Proceeds of Crimes 4, Direct Foreign Investments Law); (ii) corruption in public procurement (Law on Public Procurement Contracts, Public Financial Management and Control Law); (iii) codes of conduct and ethics for public officials (Government Officials Law, Law Concerning the Establishment of State Employees Board of Ethics and related Regulation on the Principles of Ethical Behaviours of the Public Officials and Application Procedures and Fundamentals, Law Concerning Associations and Foundations Relations with Public Institutions and Organizations and Ethics Codes of Professionals Organizations such as Bar Association, Medical Association etc.); (iv) the press and access to information (Law on the Right to Information, Press Law); and (v) investigation and prosecution (Code of Criminal Procedure, Law on Turkish Court of Accounts (regarding financial control), Law on the Declaration of Properties on the Fight with Bribe and Malversation). PERSPECTIVES ON CORRUPTION IN TURKEY (TRANSPARENCY INTERNATIONAL INDICES) Public perception on the level of corruption in Turkey has fluctuated only slightly over the past five years, according to the Transparency International Corruption Perceptions Index ( CPI ). The most recent survey shows Turkey scoring 4.2 out of a possible perfect clean score of 10, TURKEY CPI ranked at #61 out of 183 countries surveyed. Year Score Rank In a world-wide public opinion survey, the Global Corruption Barometer, 57% of respondents said that they felt the level of corruption in Turkey has increased over the last three years (only 26% felt that corruption had decreased, whilst 17% felt that there was no change). Interestingly, respondents did not score any institution more than a 3.3, where the maximum score of 5 corresponds with extremely corrupt (political parties scored 3.2, parliament scored 2.9). By contrast, in Latvia (ranked concurrently at #61 with Turkey in the 2011 CPI results), respondents felt that political parties (4.0) and parliament (3.7) where the most corrupt institutions by far. Correspondingly, the majority of respondents (59%) felt that the Turkish government s actions in the fight against corruption were effective (40% felt that they were ineffective, and 1% felt they were neither effective nor ineffective). Turkey scored a 7.5 on the Bribe Payers Index 2011, where a maximum score of 10 corresponds with the view that companies from that country never bribe abroad. With respect to foreign companies within Turkey, however, in 2010 the United States Department of State found that the public procurement sector was singled out by foreign companies as particularly susceptible to corruption, and this presented a barrier for foreign companies looking to do business in Turkey. FOREIGN BRIBERY Few cases involving foreign bribery have reached completion. In a written follow-up report to the OECD in 2010, Turkey reported that of five cases involving transnational bribery reported since 2007, one had been abandoned due to a lack of evidence, one is under preliminary consideration, two are continuing 4 Most sections of the Law on Prevention of Money Laundering are cancelled with the Law on Prevention of Laundering of Proceeds of Crimes. 3

4 and the cases concerning the UN Oil-for-Food Programme were proceeding. The OECD noted that with respect to the latter, there was very slow progress 5. The OECD report also found that there were no prosecutions, convictions or acquittals under the Turkish Criminal Code provisions for foreign bribery for the period from 1 January 2008 to 31 December Following an OECD Working Group recommendation 7, Turkey issued the Regulation on the Measures Regarding Prevention of Laundering Proceeds of Crime and Terrorist Financing, which entered force on 1 April Article 4(1) of the Regulation includes lawyers as an obliged party for limited transactions such as sales of real estates, establishment, management and transfer of companies, associations or foundations; therefore lawyers are subject to customer identification and have reporting obligations of any suspicious transaction regarding the prevention and detection of foreign bribery through the antimoney laundering system. ANTI-CORRUPTION INITIATIVES The government adopted a national anti-corruption strategy in February 2010 and an action plan to implement the strategy in April The three main components of the strategy are i) preventive measures; ii) law enforcement measures; and iii) measures to raise awareness. The specifics of these three components are outlined in a presentation made by Yüksel Yilmaz, Deputy Head of the Prime Ministry Inspection Board, available in the OECD s Anti-Corruption Policy and Integrity Training Report at Other government initiatives aimed at combating corruption include: i) a Code of Ethics for civil servants, adopted by the Ethics Council of Public Officials in April 2005 titled as the Regulation on the Principles of Ethical Behaviours of the Public Officials and Application Procedures and Fundamentals, including training to raise awareness about corruption amongst public officials; ii) the 2003 Emergency Action Plan between the Turkish government and the European Union, which includes a section on fighting corruption through improving public services, strengthening specialised anti-corruption units and enhancing public awareness; iii) the Action Plan on Increasing Transparency and Enhancing Good Governance in the Public Sector, adopted January 2002; iv) the Coordination Board for Combating Financial Crimes ( CBCFC ), which has a special mandate to address corruption and evaluate draft laws on corruption; v) the Prime Ministry Communication Centre ( BIMER ) which accepts and follows complaints from citizens; and vi) implementing simplified procedures for reducing regulatory burdens on companies, thereby removing opportunities for corruption. Non-government and private anti-corruption initiatives include Transparency International Turkey (established in July 2008); the Association for Combatting Corruption ( ACC ), which monitors the formation and operation of corruption and public anti-corruption mechanisms; and the Turkish Economic and Social Studies Foundation ( TESEV ), an independent non-governmental think-tank. TESEV has 5 Follow-up Report on the Implementation of the Phase 2 & Phase 2bis Recommendations, OECD Working Group on Bribery in International Business Transactions, 19 March 2010 ( OECD Follow-up Report ), p 32, available at: (last accessed 12 March 2012). 6 OECD Follow-up Report, Annex I. 7 OECD Follow-up Report. 4

5 conducted several studies on corruption in Turkey and has published its results in reports such as its 2003 Reasons for Corruption in Turkey from the Perspective of the Business World and Policy Suggestions 8. LEGAL PROFESSION INPUT The Union of Turkish Bar Associations ( UTBA ) does not appear to have taken any major role with respect to specific anti-corruption issues; however, it has been involved with reviewing the government s proposals for judicial reform. In September 2010, the government introduced a comprehensive constitutional reform package, which included significant changes to the judiciary. There is significant concern that these changes give parliament excessive power in appointing judges and poses a great threat to judicial independence, thus potentially undermining any effort to enforce anti-corruption laws. The UTBA organised the symposium Judicial Reform under the Shadow of the Ministry of Justice s Judicial Reform Strategy on June 2008 to review these proposals. The UTBA was also involved with the negotiation of the Judicial Reform Strategy Document, which was adopted by the Council of Ministers on 24 August 2009 as part of the Judicial Reform Strategy Action Plan. RECENT NOTABLE ENFORCEMENTS Public Procurement cases Ferit Rizvanoğlu allegedly bribed several Public Procurement Authority (KĪK) officials to win the Ankara- Konya Highway tender for his company Fermak A.Ş. in The Ankara Prosecutor s Office discovered the corruption in February 2012 and suspect that Rizvanoğlu has fled abroad. The company Nursoy Holding is accused of bribing KİK officials to win the tender for the construction of a sewage system in İstanbul s Ortaköy neighbourhood. A warrant was issued for the arrest of the company s owner, Orhan Nurdoğan. Several KĪK officials, including former Vice President Ali Kaya, have been detained following allegations they manipulated the regulation of public tenders for bribes from businessmen. Siemens AG Siemens AG disclosed in its regulatory filings that the Turkish Prime Ministry Inspection Board notified Siemens A.S. Turkey in October 2011 of an investigation in connection with alleged bribery in Turkey and Iraq from 1999 to Siemens states that it is cooperating with the authority. Aytaç Durak In March 2010, Adana Mayor Aytaç Durak was suspended by the Interior Ministry following accusations of corruption. One of his aides alleged that he amassed US$2 billion whilst in office. Durak has denied the charges. Lutfi Ekinci Lutfi Ekinci, head of customs at Istabul s main Ataturk Airport, was imprisoned in January 2011 pending trial on bribery charges in a major corruption investigation. Ekinci, along with two other customs officials, is charged with giving and receiving bribes to help companies avoid paying taxes, and breaking the law on smuggling. 3M Accoding to the Company Report dated August 2010, on September 12, 2009, 3M Company informed US Securities and Exchange Commission officially by submitting a report stating that an investigation has 8 Available in Turkish at: (last accessed 12 March 2012). 5

6 been conducted with regard to the bribery allegation that its Turkish affiliate has involved in order to abuse the fair tender procedures. Supreme Court of Appeals In October 2010, two former members of the Supreme Court of Appeals and 13 lawyers were detained under suspicion of resolving cases in exchange for bribes. RECENT DEVELOPMENTS AND NEWS The GRECO evaluation report on Turkey published in 2010 notes that there are still significant shortcomings in Turkey s anti-corruption law, most notably in the narrow concept of bribery, which excludes corrupt behaviour without an agreement between the parties, or without a breach of duty by the public official (though Turkish officials believe that the offence of securing a benefit for a task outside the scope of authority under Section 255 of the Criminal Code is sufficient in these circumstances). The European Commission has also criticised the breadth of political immunity as too wide. Shortly after current Prime Minister Erdogan took office, allegations of corruption surfaced. These involved the manipulation of contracts for personal gain whilst he was mayor of Istanbul. The charges were dropped due to parliamentary immunity. Similarly, in May 2009, a Turkish court ruled that President Abdullah Gül should stand trial for embezzlement, but the Supreme Court of Appeals overturned that ruling in June 2010, citing Gül s immunity. A draft law for re-establishing liability for legal persons, which would include corporate liability, is currently before the National Assembly for consideration. In December 2011, lawmakers adopted an amendment to reduce the maximum sentence for the offence of match-fixing in football from 12 years to three years. This was contemporaneous with the indictment of Aziz Yildirim, the president of the Turkish football league, for being a gang-leader, matchfixing and paying bribes during the season. The trial of Yildirim, along with 92 other football bosses and players, began on 14 February Even though corruption cases increasingly garner media attention, prosecution of high-level officials is rare, and there is little success in local corruption cases due to long administrative and judicial investigations. In addition, there is some concern that some public corruption cases were politically motivated. A SIGMA 9 Assessment of Turkey completed in 2011 concluded that most of the corruption cases made public related to individuals who were known for their opposition to the government. In addition, reports of retaliation against journalists for reporting corruption have been noted. For example, in 2008, journalist Dogan Yayin reported on a trial in Germany involving an Islamic charity accused of embezzling donations and sending the funds to a pro-government media outlet in Turkey. In February 2009, he was fined nearly US$500 million in penalties and back-taxes. Global Integrity 2010 considers the case a violation of human rights and the freedom of the press. 9 Support for Improvement in Governance and Management, a joint initiative of the OECD and the EU. 6