$26M Alleged Ponzi Scheme: Turkey Takes Action Against Ex-Minister

ValidViewNetwork reports that Turkish authorities have moved to freeze the assets of former Family and Social Policies Minister Fatma Betül Sayan Kaya and her husband, İlyas Kaya, as an investigation into suspicious financial-market transactions continues.

The development is part of a much larger financial scandal that has shaken Turkey’s investment-fund sector and drawn attention to transactions involving several politically connected individuals.

The latest action was announced by the Istanbul Chief Public Prosecutor’s Office, which said a request concerning the freezing of all assets belonging to Fatma Betül Sayan Kaya and her husband had been sent to the relevant institutions.

The investigation is being conducted by the prosecutor’s Terrorism Financing and Money Laundering Investigation Bureau as part of a wider probe into transactions in the capital market.

ValidViewNetwork gathered that the asset-freeze move followed allegations raised over share transactions involving Kaya and her husband.

THE $26M TO $27.5M SHARE-SALE CLAIM

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The controversy centres partly on shares in Özata Denizcilik, a Turkish shipbuilding company.

According to allegations reported by Turkish media and cited by the Associated Press, Kaya was accused of purchasing shares worth about 63.4 million Turkish lira, approximately $1.3 million, in April. The shares were subsequently sold for about 1.3 billion Turkish lira, approximately $27.5 million, shortly before a major market downturn.

The reported figures have varied across accounts, depending on whether the calculation is based on the gross value of the sale, profit or the wider transactions attributed to Kaya and her husband.

Reuters reported an even higher figure for the alleged transaction, saying Kaya and her husband were accused of investing approximately 163 million lira in April and later selling the shares for about 2.17 billion lira, roughly $44 million.

Reuters said Kaya requested President Recep Tayyip Erdoğan to relieve her of her party duties to allow an investigation.

The Associated Press separately reported that Kaya was accused of selling shares worth about 1.3 billion lira, or approximately $27.5 million, after purchasing them for about 63.4 million lira. The differences in reported figures make it important to distinguish the allegations from established findings.

WHY THE CASE HAS BECOME A MAJOR POLITICAL ISSUE

Kaya is not an ordinary private investor. She served as Turkey’s Family and Social Policies Minister from 2016 to 2018 and was a deputy chairwoman of President Erdoğan’s ruling Justice and Development Party, AKP.

She resigned from her party leadership position on September 26 following the allegations.In announcing her resignation, Kaya said she was taking political responsibility and wanted the investigation to proceed independently.

Reports said she did not provide a detailed public response to the specific trading allegations in her resignation statement.

ValidViewNetwork can confirm that her resignation came before the latest asset-freeze development. The Istanbul prosecutor’s office has now extended the investigation to the financial assets of Kaya and her husband.

THE WIDER FUND SCANDAL

The controversy involving Kaya is only one part of a much larger financial crisis. The Financial Times reported that Turkey has been dealing with an $18 billion stock-market scandal involving allegations of a Ponzi-style operation linked to investment funds.

The crisis has reportedly affected more than 450,000 investors across 131 funds, with authorities investigating alleged financial misconduct and several people being arrested.

That wider investigation has increased the importance of the questions surrounding the timing of the transactions involving Kaya and her husband.

However, the existence of an investigation and an asset-freeze request does not by itself establish criminal liability. ValidViewNetwork gathered that Turkish authorities are still investigating the financial transactions and that the allegations remain subject to the legal process.