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Enforcement agencies and corporate liability
What government agencies are principally responsible for the enforcement of civil and criminal laws and regulations applicable to businesses?
Turkish civil courts have jurisdiction over civil matters and Turkish criminal courts have jurisdiction over criminal matters.
There are also several government agencies with certain authority to oversee business-related matters and capable of enforcing certain regulations within their scope by imposing administrative fines defined in law; however, ultimately, prosecution of business crimes falls under the exclusive jurisdiction of public prosecutors and criminal courts.
Among the government agencies with authority to investigate businesses are the Financial Crimes Investigation Board (MASAK), the Public Procurement Authority, the Prime Ministry Inspection Board, the Competition Authority and the Capital Markets Board.
Scope of agency authority
What is the scope of each agency’s enforcement authority? Can the agencies pursue actions against corporate employees as well as the company itself? Do they typically do this?
Public prosecutors can initiate investigations and obtain search warrants on ‘reasonable suspicion’. The criminal courts are authorised to issue search warrants, interim orders and injunctions. Criminal courts shall render decisions on crimes related to business, which may be appealed before and finalised by the Court of Appeals. Three types of criminal courts exist under Turkish law: criminal courts of peace, criminal courts of first instance and criminal courts of serious crimes.
Criminal courts of peace oversee crimes with penalties of up to two years of imprisonment or corresponding judicial monetary fines.
Criminal courts of serious crimes oversee crimes such as fraudulent bankruptcy, bribery, forgery of official documents and other crimes with penalties of life imprisonment, aggravated life imprisonment and imprisonment for up to 10 years.
Criminal courts of first instance oversee all other crimes that are not under the jurisdiction of criminal courts of peace and serious crimes.
National courts can exercise extraterritorial jurisdiction in the prosecution of business fraud and other economic crimes, as authorised by multilateral and bilateral treaties to which Turkey is a signatory.
MASAK is commissioned to develop policies and improve legislation to deter money laundering and other financial crimes. MASAK collects data with regard to illegal and suspicious actions relating to money laundering and business crimes and conveys its findings to the related authority (eg, public prosecutors). Similarly, MASAK can act on public prosecutors’ orders to collect data and track suspicious activities.
The Prime Ministry Inspection Board is commissioned to investigate the finances and corruption of public and private organisations with the authorisation of the prime minister. For alleged corrupt activities that do not fall under the investigative authority of the Inspection Board, the Inspection Board is also obliged to inform and notify its head about any such activities that come to its attention. Similar to MASAK, in the event that an action or result is encountered that falls under the authority of the criminal courts or public prosecutors, the Inspection Board shall convey its findings to the relevant public prosecutor.
The Competition Authority exercises its investigative authority relating to conformity with competition law in respect of agreements between corporations, concerted practices and similar actions that may result in violation or restriction of competition within a specified market. The Competition Authority, in contrast to the other government agencies discussed above, has financial and administrative autonomy. It can conduct on-site investigations, examine and take copies of books and records of the company for investigative purposes and further its investigation by directing inquiries to trade associations and related parties.
The Public Procurement Authority is concerned with overseeing bid rigging before such a complaint is investigated by judicial bodies. The Authority may cancel tenders, take corrective measures or reject complaints by stating its grounds. The Authority shall notify the relevant administrative body of administrative penalties or the public prosecutor’s office of any criminal activity.
The Capital Markets Board also has investigative powers regarding wrongdoing such as market fraud, actions disrupting the market, information abuse, illegal public procurement and abuse of trust.
The Turkish Criminal Code (TCC) states that criminal liability is ‘personal’, and that no one shall be held liable for the acts of another individual. This is compounded by a further provision (article 20, paragraph 2 of the TCC) that corporate entities shall not be subjected to criminal sanctions. Therefore, only individuals can be subject to criminal proceedings related to business crimes. The only exception to this issue is the ‘security measures’ applied to corporations. The security measures listed under article 60 of the TCC include seizure of goods related to the crime or earnings obtained in a criminal manner, or the invalidation of licences belonging to a corporate entity. However, corporations have administrative and civil liability. Administrative monetary fines, warnings or other consequences can be encountered in the event of administrative violations, and corporations can face civil compensation claims.
Can multiple government entities simultaneously investigate the same target business? Must they coordinate their investigations? May they share information obtained from the target and on what terms?
Multiple government entities can simultaneously investigate the same target business; however, there is no compulsory requirement to coordinate their investigations. If the Prime Ministry Inspection Board is authorised to conduct an investigation, it has a legal role to coordinate the common inspections of other authorities and involve itself directly where it deems necessary. All public authorities are allowed to share information obtained from the target of the investigation with other public bodies concerned. They may notify and inform each other of any developments about an investigation and prompt each other for further investigation.
In what fora can civil charges be brought? In what fora can criminal charges be brought?
Depending on the content of an investigation by a government body and its internal investigation procedures, administrative sanctions can be enforced on a certain corporation, where such penalties and sanctions depend on the nature of the conduct.
In terms of criminal charges, public prosecutors may investigate a business with ‘reasonable suspicion’, where substantial evidence is not required to commence such investigation. Reasonable suspicion is at the discretion of the public prosecutors, who will also decide whether to prepare an indictment. Therefore, any implication of wrongdoing, whether reported by a government authority or notified by third parties, shall be evaluated by the prosecutor.
For civil matters, claims such as breach of contract or tort can be brought before a civil court following a complaint by a concerned party. Additionally, claims regarding violations of unfair competition rules, as regulated by article 55 of the Turkish Commercial Code, can be filed before civil courts, following a complaint by a concerned party. These claims include, but are not limited to:
- advertising in a way that violates good faith;
- defaming a business or its services or products;
- misrepresenting, or making false declarations about, a business or its products to get ahead of the competition;
- creating confusion to benefit from another’s business or its services or products; and
- misleading customers.
Corporate criminal liability
Is there a legal concept of corporate criminal liability? How does the government prove that a corporation is criminally liable for the acts of its officers, directors or employees?
Corporate criminal liability does not exist under Turkish law. Moreover, the TCC explicitly states that criminal sanctions shall not be imposed upon legal entities. According to the TCC, criminal liability is personal and corporations cannot be prosecuted for business crimes.
However, article 60 of the TCC does allow corporate entities to be subject to ‘seizure provisions’. These include:
- invalidation of a licence granted by a public authority;
- seizure of the goods used in the commitment of, or which are the result of, a crime by the representatives of a legal entity; or
- seizure of pecuniary benefits arising from or provided for the commission of a crime.
Although article 60 stipulates that a court can cancel the operational licence of a private legal entity, it has very limited application because many elements must be realised before its application. Accordingly, a conviction decision for an intentional offence shall be given, which demonstrates that an offence is performed by an individual for the benefit of the legal entity that is operating under a licence granted by a public institution with involvement of its representatives, or organs, by misusing the authorisation given by the subjected licence.
In addition, the Law on Misdemeanours (Law No. 5326), under articles 8 and 43A, regulates the misdemeanour liability of a legal person arising from the unfair acts of representatives, or organs, of the legal entity performing their duties related to its operations. Accordingly, high monetary fines of approximately 3 million lira (this value is stated as 2 million lira in article 43A, but is increased every year by the law increasing the value of administrative fines) can be applied to legal entities under this law.
As long as it is collected legally, the court has the ability to rely on any type of evidence in proving the causal link between the offence of an individual representative, involvement of the organs of a legal entity or misuse of the authorisation given by a licence, etc.
Must the government evaluate any particular factors in deciding whether to bring criminal charges against a corporation?
See question 5. As explained above, corporate criminal liability is not recognised as a concept under Turkish criminal law, and thus criminal charges cannot be brought against corporations. Only security measures are stipulated in the law. To the author’s knowledge, those measures listed in article 60 have not yet been applied.
Initiation of an investigation
What requirements must be met before a government entity can commence a civil or criminal investigation?
Civil lawsuits are filed by concerned parties. In the event of the government being a concerned party via a contract or similar legally binding agreement, that government entity can file a civil lawsuit.
In the event of a criminal investigation, reasonable suspicion is sufficient for the public prosecutor to bring charges, in a public prosecution filed with the criminal courts, against an individual engaged in the related corporation. A government entity can file a complaint to prompt the prosecutor and a related inspection board can initiate an examination that can entail a criminal proceeding.
Government agencies such as MASAK, the Competition Authority and others investigate certain fields of business operations, as explained in question 1. Suspicious transactions or the complaints of concerned parties may be sufficient for an agency to commence investigation. As a result of such an investigation, if criminal aspects are identified, the matter shall be conveyed to the public prosecutor.
What events commonly trigger a government investigation? Do different enforcement entities have different triggering events?
Government investigations may be triggered by a complaint, whistle-blowing or ex officio examination of the alleged crime by any person who notifies the related government agency; complaints and reports in the news media; or internal inspections by governmental bodies such as ministries. Pursuant to article 278 of the TCC, failure to inform the related bodies about a crime is considered a crime as well, although in practice this provision is rarely enforced.
In terms of the Competition Authority, for instance, a participant in a related market can complain to the Competition Authority about a certain agreement, or agreement between the parties, that is allegedly restricting competition. The Competition Authority may act on the complaint and commence an investigation based on the nature of the complaint.
MASAK’s investigations are mainly triggered by ‘suspicious transaction reports’ conveyed by the obliged (eg, banks, financial institutions, insurance companies, asset management companies, stock brokers and similar institutions). These organisations are defined as the ‘obliged’ under article 2 of the Law on Prevention of Laundering of Crime Revenues No. 5549, and regularly provide information to MASAK regarding transactions exceeding a certain threshold, or any other transactions that may be correlated with illegal activity. They are further obliged to provide all data and documents to MASAK on request. MASAK can also hold irregular on-site examination of the obliged records, which may also trigger an investigation.
What protections are whistle-blowers entitled to?
Whistle-blowing is not entitled to any protection in the sense of other jurisdictions, and there are no systems in place in businesses for whistle-blowers. While Turkey ratified the United Nations Convention Against Corruption on 9 November 2006, which calls for the adoption of national legislation for whistle-blowers to be protected against unjust treatment, no local legislation has been introduced. On the other hand, Turkey also ratified the International Labour Organization’s (ILO) Convention Concerning Termination of Employment at the Initiative of the Employer No. 158, which states that filing a complaint or participating in proceedings against an employer that has violated laws or regulations does not constitute valid reason for termination. Under the Turkish Constitution, international agreements are effective as local laws and thus protection under the ILO Convention is possible.
Whistle-blowers and witnesses are not protected under the Witness Protection Act (WPA) or other criminal legislation for anti-corruption-related investigations; specifically, the WPA only covers witnesses related to crimes with a penalty of aggravated imprisonment for life, or imprisonment for life, crimes with a minimum sentence of 10 years of imprisonment, as well as organised crime and terror crimes with a minimum sentence of two years. Also, the Customs Law and the Law on Preventing Smuggling refer to the WPA for protection of informants. In light of article 278 of the TCC, a person who is informed of a crime is required to notify the public prosecutor; failure to report a crime that has been committed but still has consequences, or that is still being committed, has a penalty of imprisonment for up to one year. Thus, a type of mandatory notification system is in place, rather than protecting the person who brings the crime to the attention of the authorities.
At what stage will a government entity typically publicly acknowledge an investigation? How may a business under investigation seek anonymity or otherwise protect its reputation?
There is no fixed time limit for a government entity to publicly acknowledge an investigation as no obligation for such action is established under Turkish law. Whether an investigation is publicly acknowledged depends on the level of politics and press coverage involved. As a rule, criminal investigations are confidential in order to sustain the presumption of innocence and allow prosecutors to collect evidence without meddling, while criminal prosecutions are, in principle, public.
Pursuant to article 157 of the Criminal Proceedings Law (CPL), investigations are conducted in confidence and the processes, evidence gathered and identity of the parties are kept secret. Only the defendant can examine the investigation file and obtain copies of the documents in the investigation file pursuant to article 153 of the CPL. These two provisions are enacted in line with the presumption of innocence, as regulated by article 38 of the Constitution, in order to protect the reputation of the defendant.
The anonymity of the target business’s employees is protected during investigations led by the Competition Authority and other government bodies. No information, other than the initiation of an investigation against the company, is publicly published until the end of the investigation, if at all.
Evidence gathering and investigative techniques
Is there a covert phase of the investigation, before the target business is approached by the government? Approximately how long does that phase last?
Public prosecutors have exclusive jurisdiction over the investigation phase, and there is no time limit on this phase. It may vary from a few months to a few years, depending on the case, as long as the time lapses defined in the TCC for limitation of litigation and limitation for punishment do not expire. As detailed under question 10, investigations are led in confidence; therefore, in principle, investigation itself is a covert phase. Public prosecutors are not obliged to inform the target business while conducting the investigation. However, witnesses may be called to the public prosecutor’s office or police headquarters (on the instruction of the public prosecutor) and asked questions regarding a particular aspect of the investigation.
As for the Competition Authority, investigations must be concluded within six months, pursuant to article 43 of the Law on Protection of Competition No. 4054. However, the Competition Board may grant six months of additional time for the investigation.
For investigations of tenders, a complaint can be made either to the relevant government body that opened the tender or to the Public Procurement Authority. If the complaint is made to the relevant government body, that body must finalise the examination of the complaint within 10 days. If the complaint is made to the Public Procurement Authority, the complaint must be finalised within 20 days. Complaints and examinations of complaints are not publicised.
Investigations conducted by the Prime Ministry Inspection Board shall be conducted ‘in time’, while deadlines are at the discretion of the President of the Prime Ministry Inspection Board.
The Public Procurement Authority can render a decision to prohibit a business from participating in tenders for up to two years, and if an action constitutes a crime, the Public Prosecutor’s Office shall be notified.
What investigative techniques are used during the covert phase?
The public prosecutor can conduct all legal investigation techniques, including technical surveillance and phone tapping (with a competent judge’s decision), collecting books and records (including those in electronic format and those already deleted), on-site examinations and hearing of witnesses during the investigation.
The Competition Authority can conduct on-site investigations and examine the books and records of the company, including electronic data stored or deleted on the computers of the business.
The Public Procurement Authority conducts investigations by using evidence on paper (ie, documents, written data) gathered by the complainant and then renders its decision accordingly, and refers the matter to the Public Prosecutor’s Office if criminal activity is encountered or suspected, as identified from its examination of the evidence.
MASAK conducts on-site examinations of the books and records, and the target business is required to provide all data and documents requested by MASAK.
After a target business becomes aware of the government’s investigation, what steps should it take to develop its own understanding of the facts?
Although no requirement or obligation exists, more businesses conduct their own internal investigations in the form of document and record examinations and employee testimonies, where legal counsel may also be present during such testimonies. However, internal investigations have no mitigating effect on criminal investigations.
The target business should also consider the consequences of leaks about the investigation and the information exchanged between the public authorities about its liabilities arising from other applicable legislation, such as the Tax Laws No. 193 and 213 and the Capital Markets Law No. 6362.
Evidence and materials
Must the target business preserve documents, recorded communications and any other materials in connection with a government investigation? At what stage of the investigation does that duty arise?
Pursuant to article 82 of the Turkish Commercial Code, certain books and records must be retained by corporations for 10 years. With regard to internet traffic, corporations as access providers and hosting providers must record all traffic and keep their logs and records for up to two years.
As corporations are obligated to provide all documents and records required by government agencies and public prosecutors, this duty applies at all times during the investigation. Attempting to delete or remove evidence and committing the same actions may result in both administrative and criminal liability for the persons taking such actions.
As for the Competition Authority, refusing to provide the required documents shall result in administrative penalties associated with preventing the government body from efficiently conducting its duty. The same liability will arise if inspectors of government agencies are delayed from entering business premises, inconveniences are created during on-site examinations or there is a failure to provide the requested documents and records.
During the course of an investigation, what materials - for example, documents, records, recorded communications - can the government entity require the target business to provide? What limitations do data protection and privacy laws impose and how are those limitations addressed?
The Law on Protection of Personal Data No. 6698 (PPD), was ratified in March 2016 and published in the Official Gazette in April 2016. It was long awaited and addresses major issues, such as which actions constitute data processing and the consent of the data subject for data to be processed; more importantly, it defines who the data subject is and who the data controller is. The PPD defines data processing as recording, storing, retaining, changing, rearranging, exposing, transferring, handing over or classifying data, and any other actions taken on or against data. Under this definition, any business may be considered as a data controller because it collects, pertains and stores its employees’ data, and any transfer of any personal data should be considered as the processing of personal data. The PPD clearly states that the rule means that personal data cannot be processed without the owner’s explicit consent; however, subparagraph 2 of article 5 states exceptions to this rule, with clause (Ç) of this subparagraph stating that this may be done as long as the data controller is fulfilling its legal obligations.
In light of the above explanations, it is evident that if a court or a relevant authority asks an employer to hand over the personal data of a particular employee, then the employer does not have to seek the permission of the data subject to do so, as per article 2, subparagraph 2, clause (Ç) of the PPD. If the data constitutes evidence against the defendant or respondent employee, it may be considered as a violation of the right against self-incrimination; however, this topic remains to be debated.
However, the legal requirement exception to data processing without explicit consent is not without boundaries. In delivering personal data to authorities, data controllers are still obligated to abide by the principles set out in article 4 of the PPD. The article sets forth those principles as: complying with law and the goodwill principle; maintaining correct data and updating it as necessary; processing data with defined, clear and legitimate purposes; and being restricted to and proportionate with the purpose of processing. The article also stipulates that data controllers must maintain data for the periods defined in relevant legislation, or the period required for the purposes of processing.
Data privacy is further covered by the Constitution and the TCC in terms of the individual’s right to file a civil action before the general courts, unless the individual concerned gives his or her consent regarding disclosure, processing or similar actions of personal data, there is a higher public or private benefit, or authorisation is granted by law.
However, Court of Appeal decisions explicitly provide that business emails, internet traffic, computer files and folders and all electronic data can be subject to investigation. This is grounded in the provision of the Labour Code stating that all material provided by the business to the employee is granted for business purposes only and no personal affairs can be conducted via work computers during work hours. The Turkish Constitutional Court has recently held that an employer monitoring an employee’s work email account is not contravening his or her constitutional rights. The Court ruled that an employer has the right to monitor the email accounts of employees where just cause exists, such as to prove that the employee has breached corporate regulations.
As for MASAK, the target business is required to provide all data, documents and records requested.
Similarly, the Competition Authority and Prime Ministry Inspection Board are also authorised to examine all records within the business premises and those associated with the business.
On what legal grounds can the target business oppose the government’s demand for materials? Can corporate documents be privileged? Can advice from an in-house attorney be privileged?
Opposing government demands to provide documents and data result in administrative liability and, if evaluated as removing or spoiling evidence, may result in criminal liability. Any documents found on the business premises can be examined and be subject to investigation.
Article 36 of the Advocacy Law and article 130 of the CPL, in essence, provide attorney-client privilege for correspondence between the business and its attorney. However, due to the wording of article 130 of the CPL, this privilege seems only to be granted to independent attorneys, where the article covers searches of their offices and confiscation of documents and correspondence found in their offices; such documents are privileged and must be returned to the attorney and may not be used in a potential criminal or civil proceeding.
On the other hand, some Competition Authority decisions refer to the European Court of Justice decision in Case No. 155/79 dated 18 May 1982, stating that two conditions must be met for attorney-client correspondence to be privileged. The first condition is that the correspondence must be made for the client to exercise its right to defence, and the second is that the attorney must be an independent attorney, where no employment relationship exists with the target business. However, the Competition Authority’s overriding of the attorney-client privilege for independent attorneys as well as in-house attorneys has been encountered in practice.
In practice, especially during the Competition Authority’s investigations, these provisions have been deemed inapplicable and correspondence between an independent attorney and a business has been used as evidence, as the Competition Authority’s decisions state that attorney-client privilege is only protected insofar as the client is exercising its right to defence; thus, emails sent to consult an independent attorney are not within the scope of this privilege.
May the government compel testimony of employees of the target business? What rights against incrimination, if any, do employees have? If testimony cannot be compelled, what other means does the government typically use to obtain information from corporate employees?
Government agencies and public prosecutors may compel testimony of employees. In terms of the public prosecutor, failure to provide testimony will result in the individual being brought by force to the Public Prosecutor’s Office by the police, and if the individual cannot be brought by force, the public prosecutor may issue an arrest warrant.
Under the principle of the right to a fair trial, no one can be forced to provide testimony to incriminate himself or herself, and can thus exercise the right to remain silent or refrain from submitting any incriminating documents. This right is covered by the Constitution, the European Convention on Human Rights and the TCC. Therefore, whether before the Public Prosecutors’ Office or government agencies, an individual can exercise their right not to provide a response to questions that may incriminate him or her, or not provide a response at all. However, failure to appear before the public prosecutor or government investigators may result in criminal and administrative liability.
An exemption from testifying before a public prosecutor or court is granted to those meeting the criteria as provided by article 45 of the CPL. These include a person engaged to the suspect, a spouse of the suspect (including ex-spouses), children or parents of relatives, first-, second- and third-degree relatives and persons up to second-degree affinity by marriage. Those without power of discernment may testify with the consent of their legal guardians; however, if the legal guardian is the suspect, he or she cannot decide on the exemption from testifying.
Emails, phone and computer records and all data used for the business may be examined by the authorities, whether the employee provides testimony or not.
Under what circumstances should employees obtain their own legal counsel? Under what circumstances can they be represented by counsel for the target business?
Article 149 of the CPL grants a person’s right to be represented by legal counsel during all stages of the investigation or prosecution, and exercising this right cannot be prevented.
It is recommended that an employee obtain his or her own legal counsel during all stages of an investigation. Testimony can be provided to the police in relation to any crime; however, testimony provided to the public prosecutor shall be taken into account. This principle is exercised to a certain level of flexibility in practice, and the idea behind the two testimonies is to compare them for consistency during a potential prosecution. Clients are usually advised to exercise their right to silence during testimony, especially before the police, if no legal counsel is present at the time.
It is always advised to provide testimonies in the presence of a legal counsel before the public prosecutor.
If the employee has been formally called in for police interview and identified as a suspect, the employee has the right to be assisted by legal counsel, the right to remain silent and the right to know the nature and type of the criminal offence.
If the employee is under police custody, the employee has the right to be assisted by legal counsel, the right to know the potential charges, the right to a translator and the right to access limited documents from the criminal file if the investigation is not private.
If the employee is under judicial examination, the employee has the right to be assisted by legal counsel, the right to access the criminal file, the right to file a request for specific investigations and the right to reject the judge should the conditions specified by law be present.
It is at the discretion of the target business to prefer and advise the employee to be represented by legal counsel.
Where the government is investigating multiple target businesses, may the targets share information to assist in their defence? Can shared materials remain privileged? What are the potential negative consequences of sharing information?
No specific regulation prohibits or allows multiple target businesses to share information to assist in their defence. In principle, all parties have the right of disposal to their own data and information, unless it violates other rights of personal information. As privilege is very restricted, only attorney-client privilege may apply; thus, communication between the independent attorneys of targets may enjoy such privilege in theory. However, these communications should be structured very carefully in order to prevent any assertions relating to obstruction or destruction of evidence, or in terms of competition law or concerted practices.
At what stage must the target notify investors about the investigation? What should be considered in developing the content of those disclosures?
A duty of care as regulated under both the Turkish Commercial Code and the Labour Code shall be exercised when notifying investors about an ongoing investigation. There are no definitive time limits to notify investors, but in principle and in compliance with the duty of care, businesses should immediately inform investors of an investigation.
Shareholders in joint-stock companies and limited liability companies, as per the Turkish Commercial Code, have the right to obtain information about the activities of the business and examine its books and records, and any agreement to the contrary is deemed invalid. Therefore, shareholders may also request information about the details of an investigation.
For publicly traded corporations, article 15 of the Capital Market Law No. 6362 states that any information that may affect investors’ decisions shall be declared to the public. The nature of the investigation may be declared; however, as per the presumption of innocence principle, the individuals involved shall be anonymous.
Notification before investigation
Is there a mechanism by which a target business can cooperate with the investigation? Can a target notify the government of potential wrongdoing before a government investigation has started?
Under Turkish law, failure to provide the requested documents, information or testimony may result in administrative fines or criminal penalties, or both.
In terms of both criminal and administrative law, self-reporting is not mandatory and leniency options are limited if done so. However, cooperating or notifying the government of wrongdoing may result in no penalties being incurred (in terms of the Capital Markets Law) and reduced penalties in other administrative and criminal law levels.
In terms of bribery or embezzlement, some form of leniency may be applied. This application has several conditions: if an act of bribery is committed but government bodies are informed by the individual who accepted the bribe before they become aware of the act, the individual shall not receive a penalty for bribery. The same approach is applied to persons who have agreed with another to accept a bribe, who bribed or agreed to bribe a public official or who have participated in the crime but informed the government agency before such an agency became aware of the crime.
Diminishing the damage of the crime by returning the benefit obtained or remedying the damage in full before the commencement of an investigation also reduces the punishment. In the case of embezzlement, the punishment shall be reduced by two-thirds of the original sentence. If the same is done during or after an investigation but before prosecution, punishment shall be reduced by half the original sentence. Finally, if damages are diminished before the court decision, one-third of the sentence shall be reduced. The same principle also applies for sentences for fraud, fraudulent bankruptcy and negligent bankruptcy crimes.
See question 9 for failure to report a crime.
In terms of the Capital Markets Law, similar principles are exercised where the perpetrator shall not receive any sentence of imprisonment if twice the damage is paid to the Treasury before an investigation starts in cases of market fraud. The sentence is reduced to half in the investigation phase, and by one-third in the prosecution phase.
Similar principles apply in the Competition Law for cartelists.
Voluntary disclosure programmes
Do the principal government enforcement entities have formal voluntary disclosure programmes that can qualify a business for amnesty or reduced sanctions?
See question 21 for details of leniency and amnesty applications.
See question 28 for details on effective repentance, which can be regarded as a form of voluntary disclosure established in the TCC.
Timing of cooperation
Can a target business commence cooperation at any stage of the investigation?
Different rules apply for investigations conducted by different government agencies, which may reduce sentences or not impose any penalties as a form of leniency.
What is a target business generally required to do to fulfil its obligation to cooperate?
Providing the required documents and records and establishing a suitable environment within the business premises for the agency to efficiently conduct their duty are general actions that a business can take to fulfil its obligation to cooperate.
When a target business is cooperating, what can it require of its employees? Can it pay attorneys’ fees for its employees? Can the government entity consider whether a business is paying employees’ (or former employees’) attorneys’ fees in evaluating a target’s cooperation?
Employees may be required to deliver their computers and other business-related equipment and materials for examination, as explained under question 15. As protected by the principle of the right to a fair trial, employees are not obliged to provide testimony that may incriminate themselves. However, witness testimonies are provided under oath during prosecution and thus employees are required to tell the truth during the testimony.
A business paying its employees’ attorneys’ fees does not constitute a clear indication of cooperation.
What considerations are relevant to an individual employee’s decision whether to cooperate with a government investigation in this context? What legal protections, if any, does an employee have?
As Turkish domestic law does not provide legal protection to whistle-blowers or the like, it is common for an employee’s employment contract to be terminated. However, termination of the employment contract shall be evaluated according to the provisions of the Labour Code. Accordingly, if an employment contract is terminated without valid reason or just cause, the employee can file a re-employment case before the labour courts within one month of termination. The re-employment case usually concludes in favour of the employee in the event that:
- the contract is terminated without just cause or valid reason;
- the employee is working under a contract for an indefinite period;
- 30 or more employees are employed in the same line of work in the workplace or workplaces of the employer; and
- the employee has a seniority level of at least six months.
In the event that the case is concluded in favour of the employee, if the employee wants to be reinstated, he or she must be reinstated within 10 days of the finalised decision of the court. If the employer does not reinstate the employee, the employee is entitled to severance compensation of four to eight months of salary, with an additional salary of up to four months for the term of unemployment.
On the other hand, if the employee causes damage to the business by refusing to cooperate or tampers with evidence and thus incurs administrative penalties for the business, recourse provisions of Turkish law may be exercised, and damages can be collected from the employee by the employer.
In addition, failure to cooperate (eg, refusing to provide testimony, refusing to deliver business-related equipment and material) may result in both administrative and criminal liability on both the employee and the employer, as provided in detail in question 17.
How does cooperation affect the target business’s ability to assert that certain documents and communications are privileged in other contexts, such as related civil litigation?
That certain documents and communications are privileged in other contexts, such as civil litigation, has no effect on asserting the same privilege in government or criminal investigations. As provided under question 21, failure to provide requested documents may result in criminal or administrative penalties. In parallel to this, the Draft Trade Secrets Act stipulates that even trade secrets must be submitted in financial, administrative and criminal investigations, if requested.
What mechanisms are available to resolve a government investigation?
Reduced penalties may be applied in the event that wrongdoing is remedied in full before, during or after the commencement of investigation.
Effective repentance, as regulated under articles 168, 248 and 254 of the TCC, facilitates decreased sanctions or no sanctions for those who submit to authorities before such authorities are informed of the crime. Only decreased sanctions are available for embezzlement if submitted to the authorities before the investigation phase, where it is possible to be freed from being sanctioned through an effective repentance application for bribery. Provisions of effective repentance only apply to domestic bribery and are not applicable to bribing foreign officials.
In terms of security measures applied to businesses pursuant to article 60 of the TCC, the principle of proportionality is applied; therefore, resolving the investigation by cooperating with the government agency may also mitigate the security measures applied, if any.
No plea bargaining or negotiation mechanisms exist under Turkish law. Although there is a settlement mechanism at the criminal prosecution and resolution phase, it is applied in very limited fashion and for crimes subject to complaint.
Admission of wrongdoing
Is an admission of wrongdoing by the target business required? Can that admission be used against the target in other contexts, such as related civil litigation?
Admission of wrongdoing is not required, although remedying the wrongdoing, if possible, may have mitigating effects on the penalties applied in terms of administrative law.
Criminal liability is personal. A corporation cannot admit to wrongdoing.
On the other hand, in cases of civil litigation and criminal proceedings occurring simultaneously, the Turkish Code of Obligations sets forth that acquittal decisions in criminal proceedings are not binding on the civil courts. In contrast, conviction decisions are binding as crimes do constitute torts, but absence of a crime does not prove absence of a tort.
What civil penalties can be imposed on businesses?
Civil penalties related to unfair competition may result in compensation for the concerned parties’ losses. Similarly, damages arising from breach of contract or tort can also constitute grounds for compensation.
Administrative penalties may be imposed on businesses, including:
- administrative monetary fines;
- prohibition on participating in tenders;
- cancellation of licences if the business conducts its activity with a required licence; and
- seizure of tools used in the wrongdoing.
What criminal penalties can be imposed on businesses?
Only security measures can be imposed, as regulated under article 60 of the TCC.
What is the applicable sentencing regime for businesses?
The source of the sentencing rules is the applicable laws. There are no specific sentencing guidelines or laws covering all types of offences and wrongdoing. Different laws stipulate different mechanisms for calculation and application of sentences. Broadly, as per article 5 of the TCC, the general rules of criminal law apply to any offences regulated under other laws. Accordingly, where the offence and sentence are regulated under a private law, the judge still can apply arbitrary reductions over the stipulated sentences, unless the law clearly states otherwise.
Other than civil or criminal matters decided by civil or criminal courts, a sentence may only be imposed by the relevant administrative authorities.
Examples of administrative sentences
The Capital Markets Board shall impose administrative fines on a person breaking the law ranging between 20,000 and 250,000 lira; and in the event of a profit being made because of a breach of obligations, it shall impose a fine of no less than double the amount of profit made, according to article 103 of the Law on Capital Markets Board. In accordance with the same article, the Capital Markets Board shall also impose an administrative fine on legal entities if the sentenced person was carrying out acts on behalf of the legal entity, or acting as a representative of the legal entity. The Capital Markets Board cannot settle with breaching persons. If an obligation is breached, then a fine must be imposed; thus, a sentence is mandatory. However, the Capital Markets Board has discretion as to the amount.
The Competition Authority imposes fines on legal entities based on their annual income from the previous year, while considering the reiteration, duration and severity of breach, and the market power of the breaching legal entity, as per article 16 of the Law on Protection of Competition. Article 16 also states that actively cooperating entities, employees and directors of entities may be granted amnesty from a sentence or a reduced sentence.
MASAK and the Prime Ministry Inspection Board have no authority to impose administrative fines; they can only notify the public prosecutor of their findings.
What does an admission of wrongdoing mean for the business’s future participation in particular ventures or industries?
As a consequence of bid rigging, a business can be prohibited from participating in tenders for up to two years, among other penalties. If the business operates under a required licence, such licence can be cancelled, preventing it from operating in the same field. Similarly, operations in the capital markets can be prohibited or restricted.