Turkish authorities are investigating Korkmaz Enes Ergun, the dismissed and arrested former head of the Istanbul stock exchange, on suspicion of membership in a criminal organization formed to commit offenses and of bribery, state news agency Anadolu reported. Justice Minister Akin Gürlek said the inquiry had uncovered what he described as a “comprehensive criminal organization,” rather than a case of simple stock-market fraud.
The investment-fund crisis has gripped Turkey since mid-September. The funds are suspected of manipulating share prices, prompting the country’s financial regulator to dissolve 131 of them. Nearly half a million investors are affected, with $18 billion at stake.
The scandal has led to investigations, arrests and dismissals at the financial regulator and the Finance Ministry. It has also put pressure on the governing AKP. Fatma Betül Sayan Kaya, the party’s deputy chair and a former family minister, is alleged to have made substantial gains shortly before the fund crisis.
A law passed at the end of October is intended to govern the liquidation of the affected funds and enable repayments to investors in stages. Full reimbursement has not been guaranteed.
The investigation has also raised questions about how the transactions continued for so long and whether the relevant oversight bodies intervened sufficiently. Economic commentator Necmettin Batırel told the pro-government platform TGRT that an investigation into the market’s top executive could severely undermine investor confidence. He warned that allegations against the exchange’s leadership could prompt foreign investors to withdraw capital.
President Recep Tayyip Erdoğan has described the issue as limited to part of the capital markets, saying it poses no risk to Turkey’s financial system or economy.
Sources: Der Spiegel.