Accessibility links

Turkey's Controversial Reform Bill Giving Investors Jitters

  • Dorian Jones

FILE - Turkey's Deputy Prime Minister Bulent Arinc addresses the Turkish Parliament in Ankara in a 2013 photo.

FILE - Turkey's Deputy Prime Minister Bulent Arinc addresses the Turkish Parliament in Ankara in a 2013 photo.

New legislation being considered by the Turkish parliament allowing the seizure of property from those accused of conspiring against the government is causing concern among domestic and foreign investors.

The homeland security reform bill will give police new powers in search, seizure, detention and arrests, while restricting the rights of suspects and their attorneys to acquire the details of legal proceedings brought against them during an investigation.

It would also make it possible for the government to seize the assets of people and groups convicted of threatening Turkey’s constitution or trying to overthrow the government.

Atilla Yesilada, political consultant for Global Source Partners, warns that there is increasing concern among investors both home and abroad over its impact on investments.

“The burden of proof has almost shifted from the prosecutor to the defendant, simply because it takes just reasonable suspicion for the court to confiscate assets, for maybe years. Remembering how long these cases can last, which would substantially degrade their value and may even end their commercial viability. It all comes down to how widely these laws will be applied or how selectively,” said Yesilada.

Deputy Prime Minister Bulent Arinc insists the legislation simply aims to give the police the upper hand in their battle to defend the country against conspirators.

But Emma Sinclair Webb, a senior researcher on Turkey for New York- based Human Rights Watch, warned there is good cause to be concerned over the risk of government abuse.

“Now, of course, coup plotting is a very serious charge but in Turkey it's a widely used charge. We have seen it used against a group of football supporters for participating in protests," she said. "So I think increasing the power to seize assets, is part of the government wanting to arm itself to crack down more on opponents.”

In 2009, Turkey’s largest media conglomerate Dogan was hit by an unprecedented multibillion dollar tax fine after one of his papers alleged government corruption.

And, this year, Bank Asya has repeatedly been the target of investigations and trading suspensions after President Recep Tayyip Erdogan alleged its owners were part of a conspiracy against the ruling AK Party, a charge the owners deny.

Concerns over the proposed new government powers have extended to some government officials.

Volkan Bozkir, minister for European Union membership, warned the bill could undermine Turkey's membership bid. He said he would make sure the rules comply with EU standards.

Turkey’s EU bid is already stalled, with observers warning there is little enthusiasm in Brussels for putting it back on track due to concerns the country is regressing rather than progressing with democratic reform.

Consultant Yesilada warned that these concerns, as well as the concern over the rising threat of the Islamic State on Turkey’s border, mean investor sentiment toward Turkey is in the balance.

“There are a lot of unconnected stories that are hitting the news wires which are touching the nerve endings of investors. They have not reached a point where there is a coherent negative Turkish narrative, as it's coalesced in Putin’s Russia years ago or has happened in Venezuela. But I think there is concern. They are watching. And if there any applications of these laws to companies, I am afraid the investor sentiment may change very rapidly," Yesilada said.

Despite a few dissenting voices in the government, the controversial legislation is expected to be passed by parliament and ratified by President Erdogan next month. Observers point out with government supporters earlier this month winning elections to the Supreme Board of Judges and Prosecutors, which controls and administers the judiciary, there will be few checks on how the powers will be used.

Show comments

XS
SM
MD
LG