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Europe & Central Asia

Turkey risk report

Updated:

Corruption is widespread in Turkey's public and private sectors. Public procurement and construction projects are particularly prone to corruption, and bribes are often demanded. Turkey's Criminal Code criminalizes various forms of corrupt activity, including active and passive bribery, attempted corruption, extortion, bribing a foreign official, money laundering and abuse of office. Anti-corruption laws are inconsistently enforced, and anti-corruption authorities are ineffective. Punishment for bribery may include imprisonment of up to 12 years and companies may face seizure of assets and revocation of state-issued operating licenses. Companies should note that despite facilitation payments and gifts being illegal, they are frequently encountered.

Judicial system Very high risk

There is a high risk of corruption when dealing with Turkey's judiciary. Companies report very low confidence in the independence of the judiciary and the ability of the legal framework to settle disputes or challenge regulations (GCR 2017-2018). Bribes and irregular payments in return for favorable judicial decisions are perceived by companies to be fairly common (GCR 2015-2016). About a third of Turks perceive judges and judicial officers as being corrupt (GCB 2017). Political interference, slow procedures, and an overburdened court system create a high risk for corruption in Turkey's judiciary (ICS 2017; SGI 2017). The dismissal of more than 3000 members of the judiciary following the attempted coup in 2016 has further exacerbated concerns over political interference (HRR 2017). The prosecutors who initiated an anti-corruption investigation into several senior government officials and their families were accused by the government of abusing their authority and were subsequently suspended (DW, Dec. 2014). The government's response raised concerns of impunity and executive influence negatively impacting the independence, along with impartiality and efficiency of the judiciary (European Commission, Oct. 2014). Enforcing a contract in Turkey is more time-consuming than the regional average (DB 2018).

Despite the Turkish courts having accepted international agreements on arbitration of investment disputes between foreign investors and the state, they have on occasion failed to uphold an international arbitration ruling involving private companies, and are reportedly biased against foreigners (ICS 2017). Turkey is a signatory to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, and a member state to the International Centre for the Settlement of Investment Disputes (ICSID).

Police High risk

Corruption in the Turkish police is a moderately high risk. Companies indicate that they perceive the police force as not adequately reliable (GCR 2017-2018). More than half of Turks believe most or all police officers are corrupt, and one in twenty Turks indicate they have been asked for a bribe by a police officer in the preceding year (SELDI 2016). Police impunity is a problem due to inadequate mechanisms to investigate and punish alleged corruption (HRR 2017).

Public services Moderate risk

There is a moderate risk of corruption when dealing with Turkey's public services. Bribes and irregular payments when dealing with public services are fairly uncommon (GCR 2015-2016). About one in twenty companies expect to give gifts to officials to get things done (ES 2013). Nearly two out of five Turks believe local government officials are corrupt (GCB 2017). One in twenty Turks report having been asked for a bribe by a municipal official in 2016, which is a reduction of fifty percent compared to 2014 (SELDI 2016). Impunity of corrupt officials is reported (HRR 2017). Corruption in the public administration remains widespread, particularly at the local level (SGI 2017). Municipalities controlled by the governing AKP party are generally shielded from close scrutiny by law-enforcement authorities and inspectors, while municipalities controlled by other political parties face close scrutiny (SGI 2017).

Starting a business takes less time but requires more procedural steps and capital than the regional average (DB 2018). Dealing with construction permits takes more steps than the regional average, but the time required is significantly shorter (DB 2018).

Land administration Moderate risk

There is a moderate risk of corruption in Turkey's land administration. Companies do not have full confidence in the government's ability to protect property rights (GCR 2017-2018). Turkey has a generally reliable system of recording and enforcing property rights (ICS 2017). However, complains have been recorded alleging property-related court cases proceed slowly and are susceptible to external influence (ICS 2017). Expropriation is a concern in Turkey; the government occasionally expropriates private property for public works and state industrial projects (ICS 2017). If companies do not agree to the proposed compensation, they may appeal in court (ICS 2017). Following the 2016 coup attempt, the government confiscated over 850 companies as well as significant real estate holdings over their alleged links to the "Fethullah Gulen Terrorist Organization" (ICS 2017).

Main corruption allegations lie in construction projects, for which bids are rigged, permits are illegally awarded, and bribes between government officials and developers are exchanged (Newsweek, July 2014). Nepotism, bribery, and corruption in the construction sector go unpunished in Turkey, and the government actively interferes with corruption probes (FT, Jan. 2014). Turkey's president, Recep Tayyip Erdogan, has built a new presidential palace on protected land, which has been ruled illegal by Turkey's Supreme Court (DW, May 2015).

Registering property takes a few more steps than the regional average, but the time required is dramatically shorter (DB 2018).

Tax administration Moderate risk

There is a moderate risk of encountering petty corruption when dealing with the Turkish tax administration. Businesses report that demands for bribes and irregular payments when making tax payments are fairly uncommon (GCR 2015-2016). More than half of Turks consider tax officials to be corrupt (SELDI 2016). Out of all respondents, one in twenty Turks reported having been asked for a bribe by a tax official in the preceding year (SELDI 2016). Media outlets critical of the government have been subject to targeted tax investigations and subsequent fines (SGI 2017). Up to a third of Turkey's economy is unregistered resulting in big losses in tax revenue (Daily Sabah, May 2015; Schneider, 2015).

Companies face fewer tax payments each year compared to the region, and the time required is in line with regional averages (DB 2018).

Customs administration High risk

There is a moderately high risk of corruption at the Turkish border. Businesses report that bribes and irregular payments during customs procedures are common (GETR 2016). Three out of five Turks perceive customs officers as corrupt (SELDI 2016). Companies are not satisfied with the time-predictability of import procedures in Turkey and complain about burdensome customs procedures (GETR 2016). The time required to comply with import procedures is generally lower than the regional average, but costs are significantly higher (DB 2018).

More than twenty customs officers were arrested in September 2017 on corruption charges; they are being accused of, among other things, forging documents and engaging in bribery (Anadolu Agency, Sept. 2017).

Public procurement Very high risk

There is a high risk of corruption in Turkey's public procurement sector. Companies report bribes and irregular payments are common in the process of awarding public contracts (GCR 2015-2016). Companies indicate that favoritism in the decisions of government officials is common and diversion of public funds is fairly common (GCR 2017-2018). The legislation generally requires competitive bidding procedures in the public sector, and minimum bidding thresholds exist under which foreign companies are prohibited from bidding on public tenders. Despite reforms, critics find that there is a bias by government officials to award large contracts to firms related to the ruling AKP Party (ICS 2017). Procurement safeguards at the local level have deteriorated due to legislation allowing municipalities to operate less transparently (SGI 2017). Companies should take note of offset regulations: for public contracts above USD 5 million, companies must invest up to 50 percent of contract value and "add value" to the sector (ICS 2017). Reports from the Audit Court published in the media highlights irregularities in public housing procurement (SGI 2017).

Tender notices and business opportunities are published on the website of the Public Procurement Authority (in Turkish). Companies are recommended to use a specialized public procurement due diligence tool to mitigate corruption risks related to public procurement in Turkey.

Legislation

The Turkish Criminal Code criminalizes various forms of corrupt activity, including active and passive bribery, facilitation payments, attempted corruption, extortion, bribing a foreign official, money laundering and abuse of office. Facilitation payments are prohibited (GTDT 2017). Law on Asset Disclosure, Struggle against Bribery and Corruption, (in Turkish) and the law on Public Servants, provide regulations for gifts and hospitality. There is no formal distinction between gifts and bribes, and there is no minimum threshold for a gift to potentially be considered a bribe (CMS 2016). Private bribery is also prohibited (CMS 2016). Enforcement of legislation varies and the government has been criticized for its lack of willingness to tackle corruption (BTI 2018). Individuals may be incarcerated for up to twelve years for bribery offenses (CMS 2016). Companies may face seizure of assets or income as a penalty (CMS 2016). Other relevant legislation includes the Law on the Right to Information, the Law on the Prevention of Money Laundering, the Prevention of Laundering Proceeds of Crime Law, the Law on Public Procurement Contracts, the Public Procurement Law, the Public Financial Management and Control Law and the Act on Declaration of Property and Fight with Bribe and Corruption. The legislative protection of whistleblowers is weak and insufficient (Lexology, Aug. 2017). The OECD Working Group on corruption continues to express concerns about Turkey's low levels of enforcement of foreign bribery legislation and failure to follow up on the working group's recommendations (OECD 2017).

Turkey has ratified the United Nations Convention against Corruption (UNCAC), the OECD Anti-Bribery Convention (declining an exception for facilitation payments), the Council of Europe Criminal Law Convention on Corruption and the Council of Europe Civil Law Convention on Corruption. Turkey is a member of the Council of Europe Group of States against Corruption (GRECO) but has not responded to GRECO's most recent recommendations (European Commission, Oct. 2014).

Civil society

Media freedom has steadily declined in the past decade of rule by Erdogan and declined more dramatically after the attempted coup in 2016, after which over 150 media outlets were forced to close (FotP 2017). It is estimated that between 81 and 145 journalists are jailed for their reporting as of December 2016 (FotP 2017). The government has made aggressive use of the penal code and anti-terrorism legislation to punish and jail journalists for critical reporting (FotP 2017). The state has also actively engaged in ownership change at many outlets, resulting in more consistent positive coverage for the government in mainstream media outlets (FotP 2017). The judiciary has also been used by the state to intimidate media outlets through judicial investigations (SGI 2017). Self-censorship among journalists is common (HRR 2017). Social media platforms Twitter and YouTube were repeatedly blocked by Erdogan's administration in an attempt to quell corruption allegations against the government (FotP 2017). Turkey's media environment is considered 'not free' (FotP 2017).

Civil society organizations (CSOs) have a limited influence on decision-making processes (SGI 2017); when the government does consult with CSOs, it tends to be with pro-government actors (SGI 2017). CSOs working in the field of human rights, LGBT rights and women's groups regularly face harassment by the government in the form of frequent detailed audits and threats of large fines (HRR 2017).

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