Corporate Business Crimes in Turkey

An investigation, whether internal or external, can be a serious threat to your reputation and your business. Our team of business crime & investigations lawyers have extensive expertise at the cutting edge of complex domestic and multi-jurisdictional enforcement. Our domestic expertise across Turkey covers the full range of business crime including bribery and corruption, fraud, money laundering, compliance, sanctions, market abuse and all aspects of corporate misconduct. We have a deep understanding of what can go wrong and what “good” compliance looks like. Building on our investigations expertise, we work closely with our clients to put them in the best position to prevent, detect and address business crime issues before they become an existential threat.

Business Crimes in Turkey

Corporate Business Crimes in Turkey

People rarely think about their conduct at business as being potentially illegal, or that jail time could result from poor business decisions. However, this fact is the reality. Companies are fined, and executives are sentenced to jail, when business laws are broken. Business crimes are characterized by deceit, concealment, or violation of trust. They are committed by business professionals. They generally involve fraud, and the employees committing the crimes are motivated by the desire for financial gains or fear of losing business standing, money, or property.

General Criminal Law Enforcement

Authorities to investigate and prosecute business crimes

In Turkey, public prosecutor’s offices, in general, are responsible for the prosecution of all criminal offences including business crimes. However, for certain specific offences, which are stipulated under specific legislation such as Execution and Bankruptcy Law no. 2004, complainants are allowed to directly initiate criminal lawsuits by simply submitting petitions to criminal enforcement courts.

Public prosecu­tors act on a province and sub-province level. Their jurisdiction is generally deter­mined by the place where the crime is committed. Public pros­ecutors are in command of police, gendarmerie forces (rural military police), coast guard and customs enforcement authorities who conduct the actual criminal investigation.

Apart from the authorities mentioned above, there are several administrative authorities in Turkey that can carry out criminal and administrative investigations within the auspices of their industry or specialism;

  • Violations of the Turkish Capital Market Law no. 6362 (“CML”), i.e. regulatory capital market manipulations, insider trading and securities fraud, may be investigated by the Capital Market Board.
  • Banking crimes violating compliance with banking legislation are investigated by the Banking Regulatory and Supervisory Agency (“BDDK”).
  • Violations of anti-trust law are investigated by the Competition Board.
  • Violations against prevention of laundering proceeds of crime and the Prevention of Terrorism Financing are investigated by the Financial Crimes Investigation Board (MASAK).
  • Tax crimes such as loss of tax, irregularities regarding tax payments, tax evasions and violations of secrecy of taxes are investigated by the tax authorities.

These authorities can issue fines following their investigation should they find an incompliance, but they cannot prosecute their subjects. In case they come across any criminal conduct within the meaning of Turkish Criminal Code no. 5237 (“TCC”) or any other relevant Turkish laws, they are obliged to inform the prosecution office which has jurisdiction on the matter. As a matter of fact, in certain conditions, the prosecution cannot be initiated unless the relevant administrative authority submits a criminal complaint. For example, according to article 115 of the Capital Market Law no. 6362 (“CML”), the crimes set forth under this code can only be prosecuted if the Capital Market Board duly submits a criminal complaint to the Prosecution Office.

Administrative enforcement against business crimes

An administrative fine can be imposed on a company if their represent­atives commit criminal offences or violations of the regula­tory compliance rules. In this regard, the most “common” offence committed by a representative is the omission to prevent crim­inal behaviour from within the company. Hence, if a company fails to put in place adequate compliance measures and then an employee or representative commits criminal offences, and an administrative fine can be imposed.

The administrative authorities cannot, however, prosecute or issue criminal penalties on individuals or companies

Turkey do not have a code on corporate criminal liability, which regulates that companies subject to corporate criminal liability.

The possibility of profit skimming does not exist in Turkish law. Authorities are not entitled to skim all profits resulting from criminal behaviour without any limit.

Civil enforcement against business crimes

A party damaged by business crime may seek claims for compensation by filing a civil lawsuit before the civil courts in Turkey. A common example is where a compensation case is filed against fraudsters on the basis of their tortious liability according to the Turkish Code of Obligations. In this context, the damaged party can rely on support by official authorities. The authorities can, i.a., secure asset recovery by seizing assets of the perpetrator or by freezing bank accounts. The damaged party is usually entitled to inspect the criminal file to collect evidence for claims for damages.

 Organisation of the Courts

The Turkish criminal court system has a three-tiered judicial system, which comprises of the Criminal Courts of First Instance, the Regional Appeal Courts (BAM) and the Turkish Court of Cassation (Yargıtay).

In the first tier, there are three types of courts: criminal peace judgeships; the criminal courts of general jurisdiction; and serious crimes courts. The criminal peace judgeships (sulh ceza hakimliği)  deal with objections to apprehension and custody. They also decide on arrest warrants as well as search and seizure orders.

The criminal court of general jurisdiction (asliye ceza mahkemesi) and the serious crimes courts’ (ağır ceza mahkemesi) have jurisdiction in the first instance. In respect of business crimes, the common venue is the criminal court of general jurisdiction, which has the power to judge all cases that are outside the serious crimes courts’ competence. In case an aggravated form of business crime is committed, the serious crimes court would hear the case, as it has the power to judge crimes punishable with a prison term of more than 10 years (e.g. aggravated fraud).

There are also specialised first instance criminal courts such as juvenile criminal courts, criminal courts for intellectual and industrial property and criminal enforcement courts.

In the second instance, the Regional Appeal Courts (BAM) has jurisdiction depending on the court of the first instance and the nature of the appeal.

In the third instance, the Court of Cassation is a court of last resort to conduct the appellate review for the decisions finalized by the Regional Appeal Courts. However, it has some other duties attributed by law as well as the cases that it deals with as the first instance court. The Court of Cassation operates as chambers, boards and assemblies. Also, there is the Office of General Prosecutor established within the structure of the court.

There is no involvement of a jury in criminal trials in the Turkish judicial system.

Particular Statutes and Crimes

Fraud

Fraud is defined under article 157 of Turkish Criminal Code (TCC) as deceiving another, through fraudulent behaviour, and securing a gain for himself, or others, and causing loss to the victim, or another third person. The sanction of this crime is a penalty of imprisonment for a term of one to five years and a judicial fine up to five thousand days.

The scope of this article is extensive. Criminal liability requires that the perpetrator deceives another person which causes a miscon­ception because of which the deceived person damages his own assets. The perpetrator must have acted not only with intent but also with the intention to enrich himself or a third party.

Where the offence of fraud is committed:

  • by exploiting the religious beliefs and emotions of a person,
  • by taking advantage of a person being in a dangerous or difficult circumstance,
  • by taking advantage of a weakness in the capacity to perceive,
  • by using, as an instrument, the legal personalities of
    • a public institution or corporation
    • public professional institution
    • political party
    • foundation or association
  • by causing loss to a public institution or corporation,
  • by using as an instrument electronic data processing systems, a bank or lending institution,
  • by taking advantage of the facilitative capacity of the press and publication organs,
  • by executing acts during the commercial activities of a merchant or company manager or representative of a company or within the framework of activities of a co-operative by an administrator,
  • by a freelancer, who takes advantage of the trust generated by his profession,
  • by obtaining a loan which would not otherwise be obtainable from a bank or other finance institution, or,
  • With the intention of collecting an insurance payment,
  • by impersonating a public servant or an employee of a bank or of an insurance or financial institution or by telling that s/he is related to these institutions and corporations.

the offender is sentenced to a penalty of imprisonment for a term of three to ten years and a judicial fine of up to five thousand days.

Any person who receives gain from another by representing that he has a relationship with the public authorities and is respected by them, and deceiving such person by promising that his difficulty will be resolved, is sentenced according to the provisions of the above paragraph.

Where the offence of fraud is committed jointly by three persons or more, the penalty to be imposed is increased by a half; where the offence is committed in the course of the activities of a criminal organization, the penalty to be imposed shall be increased by one fold. 

Securities fraud

The first paragraph of Article 107 on Turkish Capital Market Law (CML) prohibits the “transaction-based manipulation of securities with false information. Accordingly, the acts of buying and selling, giving, cancelling or changing orders or making account activities in order to create wrong or misleading impressions on market instruments’ prices, price changes, supply and demands will be sanctioned with imprisonment from three to five years and a judicial fine.

“Information based market manipulation” is penalized according to the second paragraph of the article. The persons who profit from spreading false, misleading or fictitious information, rumouring, providing information, commenting, preparing or spreading reports in order to influence market instruments’ prices, values or investors’ decisions will be sentenced to three to five years of imprisonment as well as a judicial fine.

Accounting fraud

A member of a company’s board or supervisory board who misrepresents or disguises the circumstances of the company in the opening balance sheet, the annual financial statements or the management report can be liable for accounting fraud (Turkish Commercial Code). In such cases there is also a high risk for bankruptcy offences (Art 161 of TCC). If managers manipulate financial figures to reach personal goals, e.g. through fake turnover, they can also be liable for fraud.

Insider trading

Turkish law prohibits several forms of insider trading: attempting or engaging in insider trading; tempting or insti­gating a third party to engage in insider trading; and unlaw­fully disclosing insider information. Insider trading is defined as when a person acquires or sells a financial instrument directly or indirectly using insider information for his own account or that of third parties. The sanction of this crime is either three to five years of imprisonment or judicial fine not less than double the profit gained by the insider trading.

Bank embezzlement

In Turkey, a special embezzlement offence that can be conducted by bankers is regulated under article 160 of the Banking Law No.5411. Bank embezzlement means a criminal activity where an employee of a bank takes funds from the bank. In embezzlement in general, a person in a position of trust abuses that trust. Embezzlers are legally allowed to handle the assets in their care and they use their positions to relocate those assets. Bank embezzlement can involve anything from stealing money in a bank vault to conducting phony transfers to move money into an embezzler’s account. Because the embezzler is a bank employee, he or she has unique access to the bank and is able to utilize that to advantage.

Bribery of government officials

Turkish law prohibits the bribing of Turkish and foreign public officials in Turkey as well as abroad (Art. 252 of TCC). Bribery can only be committed mutually, involving at least one public official and one civilian. Where the parties agree upon a bribe, they are sentenced as if the offence were completed. Any benefit, advantage, money or gift that is offered and/or rendered to a public official for a favour to be done in relation to the duty of the public official constitutes bribery.

Any person who secures, directly or through other persons, an undue advantage to a public official or another person indicated by the public official to perform or not to perform a task with regard to his duty is sentenced to a penalty of imprisonment for a term of four years to twelve years. Public officials are sentenced to the same penalty.

In the case where the public official requests a bribe but it is not accepted by the person, or the person offers or promises an undue advantage to the public official but it is not accepted by the public official, the above mentioned penalty to be imposed on the offender is reduced by half.

Any person who mediates the offer or conveys the request to the other party, closing the bribery agreement or providing the bribe is punished as accomplice, irrespective of being a public official.

Where a person who receives or requests a bribe or agrees to such is a person in a judicial capacity, an arbitrator, an expert witness, a public notary or a professional financial auditor, the penalty to be imposed is increased by one-third to one-half.

Where a legal entity secures an unjust benefit through the offence of bribery security measures specific to legal entities apply.

Where, prior to the commencement of an investigation, the person in receipt of the bribe presents the consideration of such, in its original state, to the authorities responsible for investigation of such, no penalty is imposed for the offence of bribery. Where, prior to the commencement of an investigation, a public officer who, after having agreed to receive a bribe, informs the authorities of such, no penalty is imposed.

Tax crimes

A company’s officer who provides incomplete or incorrect information or leaves the tax authorities unaware of tax-rele­vant information can be held liable for tax evasion. This often leaves managers in problematic situations after or during internal investigations. If they receive knowledge of criminal behaviour such as embezzlement or even bribery, this can lead to a duty to report such to the tax authorities since they may lead to errors in past tax declarations.

Loss of tax and irregularity of tax matters fall under the scope of administrative fines; tax evasion and secrecy of taxes, on the other hand, are specified as criminal offences and can be punished by imprisonment. 

Fraud During a Tender

Any person who acts fraudulently on behalf of a public institution or corporation, in the course of a tender that relates to construction, rent, purchase or sale of goods or services, is sentenced to a penalty of imprisonment for a term of three to seven years (Article 235 of TCC).

Acts are presumed to constitute a fraudulent tender:

  • By engaging in deception and;
    • Preventing a person from participating in the process of the tender or the tender itself, who is capable of participation in such or who has met the criteria for such;
    • Securing the participation of a person in the tender who lacks the capability to participate in such or who fails to meet the criteria required for such;
    • Eliminating from consideration such offered goods which conform to the tender specifications by stating that such goods do not so conform;
    • Placing, in the evaluation, goods which do not conform to the tender specifications by stating that such goods do so conform;
  • Enabling the access of another to information which relates to any offers, which is to be kept confidential according to Tender Law or the tender specifications.
  • Prevention of a person, who is capable of participating in a tender or having met the criteria for such, from participating in the process of tender or the tender itself , by the use of force, threats, or any other acts contrary to law.
  • Concluding an open, or secret, agreement with others, in order to influence the conditions of a tender, particularly the price, for those who are willing to participate in the tender or those who have already participated in the tender.

Where the offence of fraud during a tender is committed by use of force and threat, minimum limit of the main punishment cannot be less than five years. However, if there occurs aggravated circumstances of the offence of intentional wounding or threat which require more severe punishment, an additional punishment is imposed on account of these offences.

Where the offence of fraud during a tender is committed does not lead to any damage to the relevant public institution or organization, the offender is sentenced to imprisonment for a term of one year to three years.

Any person under an official duty who gains a benefit through his involvement in fraud during a tender shall be additionally sentenced according to the relevant offences.

Where a legal entity obtains a benefit arising from the commission of an offence falling into the scope of this offence, it is subject to specific security measures.  

Fraud during the discharge of Contractual Obligations

Any person who acts fraudulently during the discharge of contractual obligations with a public institution, public corporation, professional institution (presumed in law, to be public institution), a company, an association acting in the public interest; or a co-operative is sentenced to a penalty of imprisonment for a term of three to seven years.

Acts are presumed to constitute fraud during the discharge of a contractual obligation:

  • Delivery, or accepting delivery, of goods other than those described within the contract;
  • Delivery, or accepting delivery, of fewer goods than described within the contract;
  • Accepting goods outside the time limit specified in the contract, or the conclusion of the tender, for their delivery.
  • In construction tenders, accepting the completed construction, or material used in such, which does not comply with the conditions, quantity or quality as described within the contract or in the detailed specification of tender,
  • Accepting an obligation of service as having been completely discharged although the service rendered was deficient or contrary to the terms described within the contract or in the detailed specification of tender(Article 236 of TCC).

Where a legal entity obtains a benefit arising from the commission of an offence falling into the scope of this offence, it is subject to specific security measures.  

Manipulation of the Price

Any person who disseminates false information or news or is involved in fraudulent acts in such a way as to cause an increase or decrease in wages or in the price of consumables or goods is subject to a penalty of imprisonment for a term of three months to two years and a judicial fine(Article 236 of TCC). Where, as a consequence of this act, there is an actual increase or decrease of wages or in the prices of consumables or goods then the penalty to be imposed is increased by one third. Where the offender is a licensed intermediary or stock exchange broker then the penalty shall be additionally increased by one eighth.

Where a legal entity obtains a benefit arising from the commission of an offence falling into the scope of this offence, it is subject to specific security measures.  

Theft or abuse of busi­ness secrets

Criminal liability can result out of the betrayal of business and company secrets to unauthorised third parties by managers or staff as well as industrial espionage. Any person who discloses confidential information, or documents, relating to commerce, banking or private customers, which he holds by virtue of his title, duty, profession or trade, to an unauthorized person is subject to a penalty of imprisonment for a term of one to three years and a judicial fine up to five thousand days, upon complaint. Where such information or documents are disclosed to an unauthorized individual by a person who unlawfully acquired such information or documents, such person shall be subject to a penalty in accordance with this paragraph (Article 239 of TCC).

Where such confidential information is disclosed to a non-citizen (who is not resident in Turkey) or his staff, the penalty is increased by one third. In such case, no complaint is required.

Any person who, by using force or threats, compels another to disclose the information or documents within the scope of this crime is subject to a penalty of imprisonment for a term of three to seven years.               

Where a legal entity obtains a benefit arising from the commission of an offence falling into the scope of this offence, it is subject to specific security measures.  

Money laundering or wire fraud

Transfers of illegally acquired assets into the legal financial and economic cycle are regarded as money laundering.  All assets representing a certain value can be subject to money laundering, including cash and book money, securi­ties, receivables, movable and immovable objects and electronic money (Art 282 of TCC).

Where a person conducts any act in relation to an asset, which has been acquired as a result of an offence which carries a minimum penalty of one year imprisonment, in order to transfer such asset abroad or to give the impression that such asset has been legitimately acquired and conceal the illegitimate source of such, is subject to a penalty of imprisonment for a term of three to seven years and a judicial fine of up to twenty thousand days.

Any person who, without participation in commission of the offence set out in the above-mentioned paragraph, purchases, accepts, keeps or uses this asset by being aware of its value and such nature is subject to a penalty of imprisonment for a term of two to five years.

Cybersecurity and data protection law

Illegal recording or unlawfully giving out, publishing or obtaining personal data is forbidden as well as failure to destroy personal data. Articles 135 to 140 of Turkish Penal Code penalises the spying of data, meaning unauthor­ised access to data which is secured against unauthorised access by overcoming such access security. Criminal liability requires that the offender obtains the data for himself or another person using technical tools. In addition to that the preparing of spying on data and catching of data as well as the trade with illegally obtained data are punishable.

Data protection is regarded as an important matter in Turkey. The Data Protection Act (KVKK) prohibits the collection, processing and use of personal data in general. It is only permitted if either a clear legal basis is given or if the person concerned has expressly given his or her consent. Violations can be punished with severe penalties up to three years of imprisonment. It is of particular importance for inter­national companies to know these legal regulations, as it is possible in many cases that Turkish data protection law may apply to these companies, even if the company’s registered office is not in Turkey.

Environmental crimes

Offences against the environment are regulated in the Articles 181 to 184 of TCC. Any person who intentionally discharges waste or refuse material into the earth, water or air, contrary to the technical procedures as defined in the relevant laws and in such a way as to cause damage to the environment, is sentenced to a penalty of imprisonment for a term of six months to two years.

Any person who brings waste or refuse material into the country without permission is sentenced to a penalty of imprisonment for a term of one to three years. Where the waste, or refuse material, has the propensity to remain in the earth, water or air then the penalty to be imposed is double that of the penalty according to the above paragraphs.

Where the offences of environment are committed by a legal entity then security measure specific to legal entities is imposed.

Any person who discharges waste or refuse material into the earth, water or air through his recklessness such as to cause environmental damage is sentenced to a penalty of a judicial fine. Where the waste or refuse material has the propensity to remain in the earth, water or air then the penalty to be imposed is imprisonment for a term of two months to one year.

Bankruptcy by Deception

Any person who conducts acts of deception in order to reduce his assets and makes a decision to become bankrupt before, or after, such deception is sentenced to a penalty of imprisonment for a term of three to eight years (Art. 161 of TCC) For the existence of bankruptcy by deception one of the following is required:

  • A reduction in the value, hiding or concealing of any property, which is held as security by a creditor to guarantee his debt,
  • The hiding or destruction of commercial books, records or documents in order to prevent the discovery by others of the activities with aim of concealing property,
  • The issuing of false documents which increases the debt as if there is such a relationship between the parties, yet, in fact there is no such debt, or
  • The declaration of assets which are lower than reality, by issuing false accountancy figures or false balance sheet information.

Reckless Bankruptcy

Any person who goes bankrupt as a result of his failure to discharge proper care and attention to be expected from a merchant, is sentenced to a penalty of imprisonment for a term of two months to one year(Article 162 of TCC)

Attempting to commit a crime

To be held criminally liable for an attempt, the perpetrator’s conduct must be intentional and more than merely preparatory to the actual offence. The criminal intent must manifest itself through an act proximate to the conduct prohib­ited by law.

Any person who begins to directly act, with the appropriate means and with the intention of committing an offence, but has been unable to complete such offence due to circumstances beyond his control, is culpable for the attempt.(Art 35 of TCC)

In a case of criminal attempt, depending upon the seriousness of the damage and danger that accrued, an offender is sentenced to a penalty of imprisonment for a term of thirteen to twenty years where the offence committed requires a penalty of aggravated life imprisonment, or to a penalty of imprisonment for a term of nine years to fifteen years where the offence committed requires a penalty of life imprisonment. Otherwise the penalty shall be reduced by one-quarter to three- quarters.

Voluntary Abandonment

 An offender who voluntarily abandons the performance of the acts of committing an offence, or who prevents the completion of an offence or its consequence, is not subject to a penalty for the criminal attempt. However, where the completed part of an action constitutes an offence, he is subject to a penalty for the completed part of the act (Art. 36 of TCC)

Comments

No comments yet.

Send Comment