Business Crimes Litigation in Turkey: Trends and Outlook

Orçun Çetinkata, LL.M. - December 15, 2015

First published as an interview in Lawyer Monthly (LM68-15; page 68-69).

Istanbul is the second biggest city in Europe and the eighth in the whole world. Such a large city is bound to suffer from crime and as a result, litigation occurs. To find out more about criminal litigation and Istanbul, and indeed, Turkey as a whole, Lawyer Monthly speaks to Orçun Çetinkaya, Partner at Moroğlu Arseven, an independent corporate law firm based in Istanbul, comprising more than 40 lawyers. During his career, Mr Çetinkaya has advised and represented clients at all types and levels of dispute resolution forum in Turkey, from local ad-hoc tribunals through to supreme courts. He has also advised clients regarding their local and international disputes before various ad-hoc and institutional arbitration forums, involving a range of international arbitral procedures and rules. Mr Çetinkaya regularly supports both local and foreign clients during cross-border disputes and debts, often involving high values or complex liability issues. He has also participated in foreign proceedings as a Turkish law expert. Mr. Cetinkaya is an expert on financial crimes, as well as white collar defense.

Q: I see that most of your work time appears to be focused on Disputes, Corporate and Employment law. What percentage of your work is taken up with Criminal Law?

Criminal law constitutes approximately %25 of my work. Having said that, neither the firm nor I are involved in classic or pure criminal cases. Rather, we advise clients on financial crimes and white-collar crimes defense. We represent local companies and subsidiaries of foreign companies, as well as their board members or employees at various levels, in relation to fraud, civil fraud, forgery, bribery, tax crimes, smuggling, embezzlement, breach of trust, banking crimes, manipulation, insider trading, money laundering, gambling related crimes, customs related fines, as well as investigations related to unfair competition, asset misappropriations, cybercrimes, accounting fraud and corruption.

The firm recently established a compliance team, made up of experts in the field, allowing us to support clients regarding anti-corruption matters.

Q: How tough is the Turkish litigation system on defendants? Is the Court process particularly complex?

Interestingly, the Turkish litigation system can sometimes be quite tough for defendants, while at other times it can be quite loose.

For instance, detention is an exceptional legal safeguard during the investigation and trial process, only applicable if a strong presumption exists that the suspected person(s) have committed the alleged offense and they intend to escape or destroy evidence. However, unlike in many European Union countries, defendants can be detained and put behind bars even at the investigation stage. This can occur regardless of whether or not there is a risk the suspect might disappear or hide the evidence.

On the other hand, even though special investigation departments and bureaus exist for financial crimes, prosecutors and judges rely heavily on expert opinions for crimes such as forgery, fraud, smuggling or breach of trust.

Since it might take some time for those reports to be issued, the suspect(s) might remain in prison, even if they are completely innocent, until such a report is given in their favor by the court appointed experts.

Seizing the proceeds of crime has become rather a difficult process. Now it requires an administrative report and decision for the courts. It has proved to be an ironic relief measure for suspects, since they do not face any serious risk in that regard.

Q: What quirks does the Turkish criminal law system possess that make it unique?

Only real persons can commit crimes and receive criminal penalties in Turkey. Legal entities cannot be held criminally liable in Turkey. Therefore, there is a risk that only individuals will bear the consequences of any offenses which they commit on behalf of the company they work for, while the companies themselves may not be impacted negatively at all by investigations.

Such a system may not be deterrent enough, because companies, shareholders or beneficial owners are in a more secure zone, since no monetary fine is imposed on them.

Q: What is the biggest criminal case you have worked on during your career? Can you tell me about it?

One of my biggest criminal cases was an international fraud skim, where a London-based international financial institution was defrauded by Turkish high level fraudsters. The case involved a series of financial transactions which were discovered during the course of an irregular external audit. We worked with a set of international lawyers, attempting to locate and freeze assets belonging to the suspected fraudsters. We managed to convince the Turkish public prosecutor to initiate a criminal investigation in Turkey, as well as put sufficient pressure on the suspect that they returned all money fraudulently obtained.

Q: Have there been any recent regulatory developments to affect your work within Criminal Litigation? If so, please tell me about them.

The central authority for investigating financial crime in Turkey is the Turkish Financial Crimes Investigation Board (=Mali Suçları Arastırma Kurulu) (“MASAK”). Recent regulatory developments in the Turkish criminal system mean courts must to obtain a report from MASAK during financial crime proceedings. It generally takes between three and six months for MASAK to drafts and delivers its report to the court. If the court does not render an injunction before receiving MASAK’s report, the defendant will likely find an opportunity to transfer and hide criminal proceeds and assets. Therefore, any injunction imposed following receipt of MASAK’s report will likely be pointless since criminal proceeds and assets can no longer be seized and confiscated.

Q: Are there any changes that you think would make your job easier?

Our job would be much easier if an injunction mechanism worked efficiently in Turkey. We also believe that Turkey’s asset freezing mechanism should reach the same standards as European Union members’ legislation.

It might be ideal if Turkish courts change their approach and perspective to detention, so that defendants are not sent behind the bars before conviction so easily and discretionally.

Finally, the criminal risk for individuals who hold senior positions at legal entities should be shared by the legal entities themselves. In this way, a more deterrent criminal system can be established, more fairly distributing liability amongst all stakeholders.

Q: What motivated you to embark upon a career in law, and particularly, Criminal Litigation?

Embarking on a career in law provides a new and broader perspective of the world. Working as a lawyer is an intellectual challenge all by itself. I believe that financial crimes constitute one of the toughest problems in the world and equally in Turkey. The need for inter-disciplinary approach, multi-jurisdictional team work, the risks at stake in terms of the futures of people and entities force us to test our limits and do our best for our clients.

Q: Is there anything else you would like to add?

Compliance and anti-corruption constitute a leading area and concept in Turkey, along with wider regional and global developments. I believe corporate liability is essential to the struggle against corruption. Turkey’s current system allows malicious directors or shareholders to hide behind the corporate veil. Therefore, I believe legal entities should share the burden criminally under the Turkish criminal system in the form of monetary fines and debarments maybe, as they are in the United States or United Kingdom. Turkey’s lawmakers must introduce those mechanisms, resonating the ones in the FCPA or UKBA. . Otherwise, all recent studies and efforts in this area will not amount to any level beyond wishful thinking. Nevertheless, I am happy and optimistic that such an initiative has begun moving forward, hopefully continuing to gain traction and momentum in the near future.


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