Report: Turkish Gov. Uses Bank Loan to Gain Control Over Telecom Giant
A U.S.-based research institute has accused Turkish President Recep Tayyip Erdoğan of using a loan from a state-owned bank to gain control over one of the country’s major telecommunications operators, thus further consolidating his personal power.
Foundation for Defence of Democracies (FDD,) under Erdoğan’s direction, the US$1.6 billion loan - one of the biggest in Turkish banking history - was granted by the country’s state-owned Ziraat Bank to a company based in the British Virgin Islands. The company is believed to be a subsidiary of the Turkish conglomerate Çukurova Holding.According to the
Through a series of transactions, the nonperforming loan was used to take control of Turkcell, one of the nation's largest telecoms operators, the institute said. A nonperforming loan is a bank loan that is subject to late repayment or is unlikely to be repaid by the borrower in full. According to the FDD, barely $17 million of the $1.6 billion have been repaid.
“The Turkish president already has an established record of targeting businesses and media outlets once owned by secular figures and political rivals,” said the FDD. “The Turkish strongman appears to have used public funds, courts, and questionable financial transactions to further consolidate economic and political power.”
According to a January statement by Ziraat Bank, the loan was extended to ensure Turkcell remained under Turkish majority ownership.
However, according to the FDD, “Turkcell has the potential to be a strategic asset for Erdoğan at home and abroad.”
Earlier this year, the Turkish President had been pushing his citizens to move over from Whatsapp to Turkcells own BiP, which has less security measures than its competitors.
“The Turkish president could further attempt to use the telecommunications company to facilitate his control over information as a tool to suppress domestic dissent.”
The allegations against Ziraat Bank come shortly after Turkey’s other major state-owned bank, Halkbank, was embroiled in a scandal of its own, for what the U.S. Department of Justice called “a multibillion-dollar scheme to evade U.S. sanctions on Iran.”
Like Halkbank, Ziraat was also implicated in the dealings of the so-called Turkish ‘Gatsby,” Reza Zarrab. The 33-year-old Turkish money launderer lived a high society life before ultimately turning state witness in the U.S. case against the sanctions busting ring.
Ziraat also received the ire of the U.S. in 2019, when Erdoğan used it to prop up the ailing regime of Nicolas Maduro in Venezuela.