I INTRODUCTION
Anti-bribery and anti-corruption, which have not yet strongly differentiated themselves from one another in Turkey, have been a very hot topic in recent times. Society, lawmakers and the judiciary have taken a staunch approach against bribery in their own ways.
Society has raised its voice against bribery and corruption where possible as it regards bribery and corruption as an obstacle to the target of reaching the economic level of developed countries.
Lawmakers, due to internal pressure as well as international pressure to bring measures, particularly against bribery, to international standards, have broadened the out-of-date definition of bribery in an attempt to establish a greater deterrent and an internationally recognised measure against bribery. As for corruption, the new Turkish Commercial Code has implied several measures, even though to some these were not considered to be concrete enough.
The judiciary has also taken some steps, especially against bribery, even before the description of bribery in the Turkish Criminal Code was extended. Prosecutors in Turkey have increasingly been intervening in a wide range of issues of a commercial nature relating to alleged fraud and bribery, at times going to surprising extremes as they have tended to keep their distance from these issues in the past. Concerning the fight against bribery and corruption, therefore, Turkey has been passing through a transformation process not only in respect of the laws in place but also the effective and proper application and enforcement thereof, as well as levels of awareness and reaction of the public.
II DOMESTIC BRIBERY: LEGAL FRAMEWORK
Domestic bribery and its elements have been described in Article 252 of the Turkish Criminal Code No. 5237 dated 26 September 2004 (TCC). Article 252 has been amended by Law No. 6352 published in the Official Gazette No. 28344 and dated 5 July 2012.
Prior to the amendment, where a public official receives a benefit to perform or not to perform a task that is in compliance with his or her requisite duties, this act would be deemed as the offence of misuse of public duty, which is penalised by Article 257 of the TCC. In other words, only performing a task contrary to the official’s requisite duties constituted the offence of bribery. In line with the former version of Article 252, the Court of Appeals in its various decisions stated that performing a task in compliance with the requisite duties constitutes the offence of misuse of public duty. This interpretation of the Court of Appeals is expected to change due to the recent amendment of Article 252.
The amendment revised the definition of bribery. Receiving or providing a benefit illegally secured directly or through an intermediary by a public official or another person appointed by a public official to perform, or not to perform, a task regarding the performance of the official’s duties now results in bribery, unlike under the previous system.
While the scope of bribery has been widened by the amendment, the very nature of bribery has remained the same. Bribery is considered to be a reciprocal crime. This feature of the crime has two consequences. First, an agreement must be reached between the individual who bribes and the public official; and second, the public official is punished in the same manner as the individual who bribes.
Article 6/1(c) of the TCC defines the public official as ‘any person selected or appointed to carry out public duty for a temporary or permanent period’. Public officials are subject to the Law on Civil Servants No. 657 dated 14 July 1965. Pursuant to Article 28 of the Law, public officials (civil servants) cannot be involved in commercial activities. In addition, they cannot receive gifts or gain benefits due to their official duty (Article 29). The Regulation on the Principles of Ethical Behaviour of the Public Officials provides a list of the acceptable gifts and a list that sets outs the gifts that are strictly forbidden (Article 15). Accordingly, inter alia, greeting, farewell or celebration gifts, scholarship, travel, complimentary accommodation and gift cheques received from the persons that have a business, service or benefit relationship with the related institution; and gifts or any kind of goods, clothes, trappings or food given by persons who are benefiting from the services of these officials are within the scope of the prohibition. In light of the foregoing, providing gifts, travel expenses, meals, entertainment or facilitating payments to a public official are not permissible under Turkish law. In connection with the above, as per the Law on Declaration of Property, Anti-Corruption and Anti-Bribery Law No. 3628 dated 04 May 1990, among others, party leader of political parties, real persons who are the owner of newspapers, the board members of the newspaper and civil servants, shall submit a declaration of property and must hand in any gifts that exceed the total of ten months of minimum wage. The offence is not limited to this definition of the public official. Equally, intermediaries, irrespective of whether they are public officials, would be regarded as offenders. This category includes lawyers most importantly. Therefore, lawyers in Turkey are regarded as public officials in their dealings with third persons and institutions as well as legal entities.
Moreover, the amendment of Article 252 introduced private bribery to the Turkish legal system because Article 252/8 extends the offence of bribery to certain individuals who are not public officials. Accordingly, Article 252 applies to individuals acting on behalf of: aprofessional organisations that are public institutions; bcompanies that have been incorporated by the participation of public institutions or entities, or professional organisations that are public institutions; cfoundations that are engaged in activities within a body of public institutions or entities, or professional organisations that are public institutions; dassociations working for the public interest; ecooperatives; and fpublicly held joint-stock companies.
For instance, in a scenario where a lawyer gives money to a CEO of a publicly held company on behalf of his or her client, he or she will be regarded as committing the offence of bribery.
As regards the penalty, the individual who bribes, including intermediaries, is sentenced to imprisonment ranging from four to twelve years. A public official is sanctioned in the same manner. Where the public official who receives the bribe is a judge, a notary public or a sworn financial consultant, the duration of the imprisonment is increased by one-third.
As Turkish law has the principle of personal liability under Article 20 of the TCC, which states that ‘no punitive sanctions may be imposed for the legal entities’, legal entities can only be subject to security measures. In this case, a fine of up to 2 million lira can be imposed (Article 43/A of the Law of Misdemeanours) and the legal entity can have its business licence cancelled (Article 60 of the TCC).
III ENFORCEMENT: DOMESTIC BRIBERY
While the new definition of bribery in Article 252 of the TCC has not yet been tested by the Court of Appeals, it is certain that the implications thereof will be outstanding in respect of the case numbers and the numbers of individuals accused.
The crime of bribery has been a hot topic in recent years. Some well-known public figures have been accused of bribery either due to their important public duties or the official transactions in which they were involved, which have drawn a considerable level of public attention.
Turkish society, which for a long time regarded bribery as a form of sickness attached to the public services in one way or another and has been considering bribery as a fundamental obstacle to the improvement of public services in Turkey, has been increasingly making its concerns known regarding the need, level and effectiveness of tackling bribery.
The lawmakers and the judiciary have tried to respond to these concerns in their own ways. The lawmakers have widened the definition of bribery as discussed above. While the wider definition was a move in a sense to bring the legislative framework to an international level, it has also addressed uneasiness among the public as the fight against bribery with the previous legal ground was ineffective and was therefore far from being a deterrent. This was due to the narrow definition of bribery in the TCC as well as its soft application, according to some.
Before the amendment was made to the definition of bribery in the TCC, public prosecutors ran a large number of investigations so as to respond to the social expectations in this respect. With the close cooperation of the police, prosecutors investigated public procurement and customs operations. These investigations have attracted a considerable degree of public attention. Due to these investigations, for example, more than 100 customs officials and brokers have been named as suspects and then accused as a result of the acceptance of indictments by the criminal courts.
The investigations shook customs practices in Turkey. The customs offices, customs brokers and the importer companies alike have put compliance programmes in place to avoid such occurrences. On the public procurement front, one of the biggest holdings in the construction industry is alleged to have bribed public officials to win the tender for the construction of a sewage system in Istanbul. The investigation is still pending.
The mayor of the one of the biggest cities in Turkey was also suspended by the Interior Ministry following accusations of corruption. The investigation is still pending.
Apart from the above, in late December 2013, the Turkish government was rocked by the waves of corruption. The prosecution office alleged that bureaucrats, several prominent businessmen, a mayor in Istanbul and the sons of three ministers, committed bribery and involved in corrupted practices. Additionally, it is alleged that with the help of his off-record connections with three ministers and several bureaucrats, one of the well-known businessmen in Turkey has transferred funds and smuggled gold through a Turkish Bank and by couriers to Iran. However, the outcome of these investigations is ironic since 96 suspects were released with a decision of non-prosecution and preventive measures imposed on the suspects such as freeze of accounts, were dismissed.
IV FOREIGN BRIBERY: LEGAL FRAMEWORK
Under the amendment of July 2012, with regard to bribery of foreign public officials, the provision penalising the bribery of foreign public officials has also been amended and the scope of the definition of foreign public officials has been widened. According to the new provision, bribery with respect to foreign officials is deemed to be constituted of: aoffering, promising or giving a benefit for the purposes of fulfilling a job, or not fulfilling a job, or gaining an unfair benefit (or preserving one); bdirectly or through an intermediary as a result of international commercial transactions; to the following officials: cofficials who have been elected or appointed in a foreign country; dofficials working in international or supranational or foreign courts (such as judges, jury); emembers of international or supranational parliaments; fpersons who perform a public duty for a foreign country including foreign public institutions; ga citizen or foreign arbitrators who are appointed to arbitration for a dispute resolution; and hofficials or representatives of international or supranational organisations that have been established by international treaties.
In addition to above provision of the offence of foreign bribery, a new paragraph has been added to Article 252 that gives the power to initiate a prosecution ex officio against foreigners who bribe foreign officials outside Turkey in relation to a transaction in which Turkey, or a public institution located in Turkey, or a legal entity, established under Turkish laws, or a Turkish citizen, is involved. That being said, there was a contradiction in the TCC since it stipulated under Article 12 that the commencement of proceedings were subject to the demand of the Ministry of Justice. With the latest judicial package introduced in July 2014, such contradiction is resolved and the need for the request of the Ministry of Justice is lifted. Thus, foreigners who bribe foreign officials outside Turkey in relation to Turkish affairs are now subject to investigation and prosecution ex officio.
V ASSOCIATED OFFENCES: FINANCIAL RECORD KEEPING AND MONEY LAUNDERING
Under Turkish law, the type of books subject to the obligation for maintenance, the scope of the obligation and the liabilities that may arise in cases of non-compliance with such obligations are determined by various regulations, such as the Turkish Commercial Code No. 6102 (the Commercial Code), the Tax Procedure Code (TPC), the Bankruptcy and Enforcement Code and the Social Insurance and General Health Insurance Code (SIGHIC).
Pursuant to relevant provisions of the Commercial Code, all types of companies shall maintain an account book, inventory, ledger, shareholders’ book, and a decision book wherein board of director’s decisions are recorded. Joint-stock companies are required to keep a shareholders’ book, and, if they have issued bonds, a bond book as well.
If the company books and documents are lost because of disasters such as a fire, flood or earthquake, the Commercial Code regulates that the company shall apply to court within 15 days of the occurrence date of the incident, and request an official document called a ‘loss document’, which confirms that the company was not negligent in relation to the loss of the books or documents.
Because under reasonable circumstances the Court of Appeals has traditionally accepted book and document theft as a valid reason for the issuance of a loss document, theft is included alongside other disasters in the new Turkish Commercial Code, which entered into force in July 2012.
As to the sanctions for record keeping violations, pursuant to the Commercial Code, the TPC and the SIGHIC, various sanctions and fines can be imposed to those companies that do not keep books and documents for the stipulated periods of time, or make them available to authorities for inspection. In a dispute, failure to submit books constitutes conclusive evidence against the company. Moreover, in a potential tax assessment, the company may face a tax penalty or might not be able to take advantage of its rightful VAT deductions.
Regarding criminal sanctions, according to the new Commercial Code, a judicial fine corresponding to up to 300 days will be imposed against companies that do not comply with book maintenance obligation by not obtaining company books approval; duly maintaining the company books; and submitting the documents when requested.
Unlike the accidental loss of documents, deliberate acts of document forgery might raise the suspicion of money laundering.
The Law on Prevention of Laundering Proceeds of Crime No. 5549 dated 11 October 2006 (Law No. 5549), the Regulation on Measures Regarding Prevention of Laundering Proceeds of Crime and Financing of Terrorism, the Regulation on Program of Compliance with Obligations of Anti-Money Laundering and Combating the Financing of Terrorism and communiqués issued by the Ministry of Finance on the implementation of measures taken by the Financial Crimes Investigation Board of the Ministry of Finance (MASAK) form the Turkish anti-money laundering legislation.
Article 282 of the TCC sets forth the legal basis of money laundering. Accordingly, any person who transfers the assets acquired from an offence that requires at least six months’ imprisonment, or carries the same to a foreign country to be subject to various transactions in order to hide the illegal source of these assets and to give the impression that they are acquired in the lawful manner, shall be sentenced to imprisonment of between three and seven years, and shall also be liable to a punitive fine of up to 20,000 days.
Concerning the regulatory body, one should note that MASAK was established in 1996 with a special mandate to address corruption. It is empowered to collect data, request documents from relevant bodies, and most importantly to convey the investigation files to the competent Public Prosecutor who is authorised to prosecute money laundering cases.
Finally, Law No. 5549 sets forth the principles for the prevention of money laundering. Among others, Law No. 5549 requires the disclosure of suspicious financial transactions. Those who operate in the fields of banking, insurance, individual pensions, capital markets, money lending and other financial services, and postal service and transportation, lotteries and bets; those who deal with exchange, real estate, precious stones and metals, jewellery, all kinds of transportation vehicles, construction machines, historical artifacts, artworks, antiques or intermediaries in these operations; and notaries, sports clubs and those operating in other fields determined by the Council of Ministers (‘obliged party’ as defined in Law No. 5549) are required to disclose suspicious transactions. Any information, suspicion or reasonable grounds to suspect that the asset that is subject to the transactions carried out or attempted to be carried out within or through the obliged parties, although not necessarily related to bribery conduct, is acquired through illegal ways or used for illegal purposes, must be disclosed to the presidency of MASAK.
VI ENFORCEMENT: FOREIGN BRIBERY AND ASSOCIATED OFFENCES
As the Exporting Corruption: OECD Progress Report 2013[1] states, Turkey is one of the countries where anti- corruption rules have little enforcement; it is not possible, therefore, to cite many foreign bribery cases with a cross-border outlook.
It is known that investigations have initiated against three companies i.e. a well-known tech darling, an innovative consumer and medical device company having more than 50 branches all over the world and a reputable player in the safety and security sector, with the allegations that the Turkish subsidiaries of these companies have bribed Turkish government officials. However, all of these investigations were dropped by the prosecutors although other subsidiaries of these companies were convicted of bribery in other countries; which might be regarded as an objective indicator to the level of enforcement in Turkey.
In 2011, Turkey initiated a foreign bribery investigation against a Turkish company having a business relationship with the Oil-for-Food programme in Iraq, which is a programme started by the UN Security Council in 1996. On 20 September 2011, the Ankara Court concluded that the acts were committed prior to the act becoming a crime; eventually, the defendants were acquitted of the offence. A well-known corruption scandal in 2011 caused the Turkish Prime Ministry Inspection Board to initiate an investigation against the same company’s Turkish subsidiaries in 2011. The investigation continues on the allegations that the company in question was involved in bribery in Turkey and Iraq from 1999 to 2007. Lastly, in April 2012, one of the largest mobile phone providers in Turkey initiated an internal investigation about allegations of ‘improper payments’ related to a mobile operator in Kazakhstan in which it has indirect shareholding through its subsidiary.
VII INTERNATIONAL ORGANISATIONS AND AGREEMENTS
Among others, most importantly Turkey is signatory to and has signed several conventions such as: athe United Nations Convention against Corruption; bthe United Nations Convention against Transnational Organized Crime; cthe OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions; dthe Council of Europe Criminal Law Convention on Corruption; ethe Council of Europe Civil Law Convention on Corruption; and fthe Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism.
In addition, Turkey has been a member of Financial Action Task Force since 1991 and the Group of States against Corruption (GRECO) since 2004. In line with the suggestions of GRECO, Turkish Government has recently adopted the decision on the approval of the Additional Protocol to the Criminal Law Convention on Corruption as a law, which extends the scope of the convention to arbitrators and jurors, in July 2014. Notably, such extension was already implemented under the abovementioned amendment of July 2012.
Furthermore, Turkey very recently became a member of the Agreement for the Establishment of the International Anti-Corruption Academy as an International Organization.
Advocates of anti-corruption practices see this membership as an indication of the Turkish government’s commitment to fighting against corruption.
VIII LEGISLATIVE DEVELOPMENTS
The strategy of the government on increasing transparency and strengthening the fight against corruption for 2010 to 2014 has been published in Official Gazette No. 27501 dated 22 February 2010. This action plan provides a strategy for tackling corruption. Three main components of this strategy are: preventive measures; law enforcement measures; and measures to raise awareness.[2] Likewise, the Strategic Plan of 2011-2015 published by Turkish Prime Ministry on 2010, also focuses on anti-corruption measures.[3]
Within the scope of this action plan, inter alia, completing the ongoing work for the creation of ombudsmen, improving transparency of the financing of political parties and elections, finalising expected legislation about state secrets and trade secrets and revisiting the public procurement system are cited as the expected measures to be taken by the government.
Another legislative development regarding corruption is the amendments placed right after the investigations in December 17, 2013. On February 6, 2014, the 5th judicial reform package which included several amendments, including but not limited to, amendments to the Turkish Criminal Procedure Code numbered 5271 (“CPC”), is passed as a law. These amendments focused on the preventive measures which, among other things, relate to bribery and corruption related crimes. The amendments hold great importance since preventive measures; in general, present themselves as the sanctions of the bribery and other corrupt practices. The amendments introduced that confiscation as a preventive measure during the criminal proceedings can only be conducted with unanimous affirmative votes of three judges at the High Criminal Court. As per the former legislation, the judge of Criminal Court of First Instance was able to take such measures. In addition, an administrative step is introduced for such a measure to be taken. For the High Criminal Court to take a measure of this nature it needs a report from a competent regulatory authority regarding the existence and value generated from the crime committed. Thus, in order to decide on a measure of confiscation, judges need to have a report from a competent authority e.g. Banking Regulation and Supervision Agency, Capital Markets Board, MASAK, and this report is ideally to be submitted by these authorities in three months.
While the efficiency, objectivity and reliability of this new confiscation system was criticized, the amendments also raised questions as to whether this report will be considered as an expert report or an administrative decision, since the objection mechanism against the report would change depending on its nature. Although the amendments might cause a period of ambiguity, they surely encourage the implementation of EU standards in general. It is hoped that these amendments would ultimately create a safer zone for corporations operating in Turkey, as they secure the conditions of confiscation.
Last but not least, with the latest judicial reform package accepted in July 2014 (mentioned in Section IV), two new amendments have been implemented to the TCC. With the amendments, the precondition of the request of the Ministry of Justice (Article 12 of the TCC) was abolished (Please see Section IV above) and Article 277 of the Criminal Code, which regulates the crime of intervening in a judicial process, was amended in a way that any intervention during an investigation phase will no longer be a crime.
IX OTHER LAWS AFFECTING THE RESPONSE TO CORRUPTION
The TCC remains the main regulation in response to corruption and bribery. As the name suggests, however, the TCC is the general law for all types of crimes.
This is why in the TCC there are only some provisions allocated to corruption and bribery. It has been mentioned that a special law dealing with only corruption and bribery would have suited the needs of the matter and been a more effective measure against such acts. Because of the scope that needs to be covered by the TCC, corruption and bribery provisions have found only a minor place in the law, which causes ineffective application and enforcement of those clauses as the definition, variations and penalties of those crimes are squeezed into those limited provisions. Even though there is some secondary legislation such as the Law on Declaration of Assets and Combat against Bribery and Corruption, a special law focusing on corruption and bribery would be a positive development.
On the other hand, there are a large number of provisions in various laws such as the Commercial Code, the Customs Law, the Smuggling Law, the Tender Law and the like dealing with corruption in one way or another. However, as there is no umbrella law under which all those laws, regulations concerning corruption and bribery are mentioned or systematised it might be insufficient to mention some of those laws affecting the response to corruption and not mention the others.
If one law should be mentioned, however, it would be the Customs Law No. 4458. The Customs Law and its Regulation, as well as secondary communiqués issued according to those, focus on corruption heavily although the terminology used differs at times from corruption or bribery. It is understandable that the Customs Law is the law where corruption is heavily dealt with, as importers being real persons or legal entities are always interacting with customs officers to complete their transactions.
X COMPLIANCE
The terms compliance and compliance programmes have been more commonly used in practice as a result of the increase in international investments in Turkey. In particular, the strong presence of US and UK-based companies in business life entails an increase in the awareness of business people about anti-corruption, international trade and money laundering rules and trade restrictions, etc., in a general sense.
There is no specific law describing the basics of a compliance programme focused on bribery, nor does any guidance published by an official body exist. However, there is the Regulation on Program of Compliance with Obligations of Anti-Money Laundering and Combating the Financing of Terrorism (the Regulation on Program of Compliance) based on Law No. 5549 on Prevention of Laundering Proceeds of Crime.[4] This Regulation is only binding for banks, capital markets brokerage houses, insurance and pension companies, the general directorate of post pertaining only to banking activities and their broad agencies, representatives, commercial representatives and similar affiliated units. This Law and Regulation provides scope for a compliance programme that must be established on a risk-based approach. According to Article 5 of the Regulation on Program of Compliance, a proper compliance programme shall be appropriate for developing institutional policy and procedures, carrying out monitoring and controlling activities, assigning a compliance officer and establishing the compliance unit, carrying out training activities and internal control activities. This legislation can be considered as guidance by companies who would like to enforce an effective compliance programme.
Having a compliance programme in force is not accepted as a solid defence in the Turkish jurisdiction to eliminate the risk of being confronted with a criminal investigation or sanction. From a legal point of view, however, because Turkish criminal law requires wilful intention to commit a bribery, having a compliance programme can be provided as part of a full defence strategy from the perspective of an accused company to demonstrate that neither the company nor its representatives had any intention to commit a crime nor instructed its employees in a way directing them to give a bribe. Especially, to demonstrate that the act of the authorised representative of the company has no involvement to the case, the compliance programme can be shown as evidence of proper and clear instructions on business principles. On the other hand, this defence may not be accepted as a proper defence for the company to eliminate the risk of being confronted with a measure stipulated under Article 60 of the TCC where there is a beneficial outcome of the subjected bribery for the company. But it certainly can be considered as a mitigating factor to decrease the level of sanctions.
Contrary to its position as a helpful defence tool for companies, corporate compliance programmes may be used against the employee who was involved in bribery to demonstrate that the employee had clear instructions and rules to follow in performing his or her duties. Breaching the company’s business rules – even in cases where there is an instruction by a higher-positioned employee – can be used as evidence of wilful intention to commit a crime, and can be a reason for rightful termination of the employment contract without waiting for the result of the relevant investigation or trial.
XI OUTLOOK AND CONCLUSIONS
Turkey is undergoing a kind of transformation process in the way it regards corruption and bribery, as well as the way in which it takes action against these acts. Turkish society is becoming more aware of and interested in the fight against corruption and it is no longer taking corrupt systems lightly. In response, with the amendment to Article 252, the legislator broadened the scope of bribery. Consequently, Turkey may expect less criticism from international bodies and advocates of anti-corruption activities in that regard.
A special law dealing with only corruption and bribery in detail would also help to increase the level of effectiveness of actions against corruption and bribery. There have been discussions in some circles where practitioners and scholars discuss and press for such a law; the outcome of such discussions remains to be seen.
Prosecutors’ increased intervention in commercial issues involving allegations of corruption and bribery is a new trend, while such interventions seem to have taken the place of intervention in relation to people or issues only having political or large public interest one way or another, which is causing concerns among practitioners and scholars.
First published by Law Business Research in Jan 22, 2014.
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