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The year 2019 was a busy one for Turkey with regard to anti-corruption and compliance matters. This article explores the developments from both a national and an international perspective.
The European Commission published its Turkey 2019 Report as part of its 2019 Communication on EU Enlargement Policy.(1) The report highlights Turkey's shortcomings with regard to fighting corruption and provides recommendations on how to improve. In particular, the commission emphasised Turkey's lack of an independent and centralised anti-corruption authority and specialised prosecution office. It remarked that many of the deficiencies had been caused by dismantled and uncoordinated law enforcement agencies. Further, the report stated that the investigation and prosecution of high-level corruption cases are prone to undue influence from executives and that the requirement for prior authorisation from superior officials with regard to the commencement of investigations into public officials provides unfair legal protection. With regard to anti-corruption enforcement, the commission maintains that the sentences passed for corruption have no deterrent effect and that, as regards some offences, convicts can benefit from deferred sentences.
On 30 October 2019 a law approving the memorandum of understanding between Turkey and the Organisation for Economic Cooperation and Development (OECD) (dated 31 May 2018) regarding the establishment of a centre in Istanbul was enacted via the Official Gazette.(2) The centre will act as a hub for regional programmes, build capacity in designing and implementing policies and conduct policy research. The centre's main policy focus areas will be competitiveness, entrepreneurship, trade, public governance, investment, innovation, human capital development, connectivity, infrastructure development and green growth. While the centre is expected to make a major contribution to Turkey's relationship with the OECD and neighbouring countries in 2020, it should be noted that in 2019 the OECD issued a warning to Turkey regarding its foreign bribery enforcement framework.(3) Considering that the penalties for legal persons are not sufficiently effective, proportionate and dissuasive regarding foreign corruption, and that there have been no foreign bribery convictions in Turkey in the past 16 years, the OECD declared in March 2019 that it would send a high-level mission to Ankara in 2020 unless Turkey had taken concrete action by October 2019. On 1 October 2019 Turkey submitted a report(4) explaining the actions that it had taken against each of the OECD's recommendations; however, the OECD's assessment is yet to happen.
In December 2019 the Financial Action Task Force (FATF) published its Mutual Evaluation Report,(5) in which Turkey was warned that it would be added to the grey list if its shortcomings (eg, the need to improve measures for freezing assets linked to terrorism and the proliferation of weapons of mass destruction) were not addressed. Out of a list of 11 effectiveness measures, Turkey was deemed to need major or fundamental improvements in nine. The report states that since 2016, Turkish investigators have been heavily focused on financial crimes directly relating to the failed coup, while the fight against money laundering in other cases has been negligible.
In 2019 the judicial reform package was the subject of much debate. The first step taken towards the package's implementation was Law 7188, which made critical amendments to the criminal procedure. Among other modifications, two new trial procedures have been introduced to the Turkish criminal justice system – namely, the accelerated trial procedure and the simple trial procedure. The accelerated trial procedure will apply only for crimes that require the consent of the suspect before a lawyer. A new regulation regarding the details of the procedure entered into force on 1 January 2020. The simple trial procedure will apply only for crimes that require a judicial fine or imprisonment of two years or less.(6)
There was a burst of activity regarding the Foreign Corrupt Practices Act (FCPA) in 2019. Among other jurisdictions which have extra-territorial applications regarding foreign corruption, FCPA enforcement authorities set a new record in 2019. Companies indicted with FCPA charges made an all-time high $2.9 billion payment to resolve FCPA cases. During the past decade, the average amount of an FCPA resolution was higher than in previous decades. Moreover, in 2019 two new companies (Ericsson with more than $1 billion(7) and MTS with $850 million(8)) joined the list of the 10 largest FCPA cases of all time based on the amount paid.(9) Notably, Microsoft's(10) and Fresenius'(11) FCPA resolutions mentioned anti-bribery charges in relation to conduct in Turkey.
(1) The report is available here.
(2) The code and the memorandum of understanding are available in Turkish, English and French here.
(3) The OECD announcement is available here.
(4) The report is available here.
(5) Further information is available here.
(6) Further details regarding these two procedures and other amendments are available here.
(7) The Department of Justice press release of the case is available here.
(8) The US Securities and Exchange Commission (SEC) press release of this case is available here.
(9) The list is available here.
(10) The SEC press release of this case is available here.
(11) The US Department of Justice press release of this case is available here.