What business does Erdoğan’s family have in tax havens?

The leader of Turkey’s main opposition party Kemal Kılıçdaroğlu revealed documents in parliament that he said showed money transfers between Turkish President Recep Tayyip Erdoğan’s close circle and an offshore company in the Isle of Man, a British island jurisdiction with zero percent corporate tax.

Ruling party officials and pro-government media pundits were initially confused about whether to call the documents fake, or to say they were real, but showed no wrongdoing.

Public records, however, reveal not one, but three linked offshore companies owned by Erdoğan’s close circle, two in the Isle of Man and one in Malta, another tax haven, Craig Shaw from online investigative magazine The Black Sea revealed in May.

Shaw recently updated his articles with more company records following Kılıçdaroğlu’s allegations.

opposition Republican People’s Party (CHP) deputy Bülent Tezcan on Friday shared a 149-page pdf file that has scanned copies of official documents apparently belonging to Bellway Limited, registered in the Isle of Man, and bank records of money transfers, a total of $15 million, from Bellway’s account in Halkbank to Erdoğan’s relatives.

The first page of the document above shows a screenshot of what appears to be Halkbank’s internal query software, listing money transfers between Jan. 1, 2011 and March 3, 2014. While the start date of the query is unremarkable, since Bellway was founded in 2011, the end date is not, since the company continues to exist to this day.

A possible explanation could be that the person who had ran the original query and took its screen shot, did so back in March 2014. What is significant about that date is that it corresponds to other leaks from the December 2013 graft probe, most notably the wiretapped audio conversations between Erdoğan and his circle, where they allegedly talked about receiving bribes and favours from businessmen in return for public tenders.

Erdoğan, Turkey’s prime minister at the time, intervened with the investigation by replacing the prosecutors and police chiefs, and accused followers of the U.S.-based Islamic cleric Fethullah Gülen for attempting to overthrow the government. Gülen maintains that he was not involved.

After the investigation was suppressed, recordings of wiretaps were uploaded to YouTube under the title “Başçalan” (The Master Thief), right before local elections in March 2014. Erdoğan claimed the recordings were fake, but forensic experts mainly disagreed. Some of the tapes are now court evidence on a U.S. trial against a former Halkbank official.

When Kılıçdaroğlu was asked about the source of these documents, specifically whether they were provided by Gülen’s followers, the CHP leader was quoted by news website T24 as saying “there are millions of patriotic bureaucrats in this country”.

Patriotic or not, CHP’s whistleblower seem to have the ability to access official banking documents.

The scanned bank receipts in the CHP’s file are printed on Halkbank’s numbered letterhead, and appear to bear digital reference numbers and signatures of officials from the corporate branch of Halkbank in Salıpazarı, Istanbul. The IBAN (International Bank Account Number) of Bellway Limited, shown on the documents, is also valid, and points to the same branch.

Bellway’s certificates of incorporation, provided at the end of the CHP file, are notarised in two countries, the Isle of Man and Turkey, apostilled and filed with its sworn translations into Turkish, all of which are legal requirements for a foreign company to open a bank account in Turkey. These documents must be filed by Halkbank, and most likely, were accessed later by a banking official.

Halkbank did not respond to our request for comment on the authenticity of the documents.

Erdoğan’s lawyer Ahmet Özel was quoted by the state-run Anadolu Agency (AA), as saying that the allegations are not true and Kılıçdaroğlu should hand documents over to a prosecutor’s office.

A lawyer for Bellway Limited, Turan Öner, was also quoted by AA as stating that Erdoğan’s relatives had never sent such money to Bellway Limited, and any document that claimed otherwise was fake.

However, the original company records of Bellway Limited can be obtained for £15 from Isle of Man’s online company registry (they are provided at the end of this article).

Clarifying the direction of money transfers, Erdoğan was later quoted by Turkish news website Diken as saying, his brother, son, two brothers-in-law, and his former executive assistant did not send, but received the money ($15 million from Bellway), for selling their company:

“These people [the relatives mentioned by Kılıçdaroğlu] are businessmen who have done important work in the last 30 to 40 years… There is nothing dubious about these transactions.”

Transparency International’s Turkey chair Oya Özarslan said the first-degree relatives of politicians should also be held accountable, as wealth can easily be transferred to them. International regulations on financial crimes also include family members and close associates of senior government officials (e.g. FATF recommendations, p.19).

How then did the president’s son, Ahmet Burak Erdoğan, aged 32 at the time, got $3.75 million out of this sale? His brother-in-law, Ziya İlgen, who is a retired teacher, and his brother, Mustafa Erdoğan, who was shipfitter until Erdoğan became Istanbul’s mayor in 1994, also got $3.75 million each.

What was the secret to their success?

In April 2006, the five men in Erdoğan’s close circle founded “Bumerz Denizcilik” (Bumerz Shipping, formerly Turkuaz) in Istanbul with capital of 1 million Turkish lira (about $700,000 at the time), according to Turkish company registry. The name comes from Erdoğan’s son Burak, brother Mustafa Erdoğan and brother-in-law Ziya, who held 25 percent of the shares each. The remaining shares were owned by Burak’s father-in-law, Osman Ketenci, and Erdoğan’s then private executive assistant, Mustafa Gündoğan, with 15 percent and 10 percent, respectively.

The distribution of $15 million from Bellway Limited in the 2011 bank receipts corresponds to this shareholder structure of Bumerz Denizcilik. But that leads to the next question: How could Bumerz be worth 21 times more five years later?

The answer is in Malta.

Two years after Bumerz Denizcilik was founded in Turkey, Erdoğan’s brother-in-law Ziya İlgen registered the family’s first known offshore company “Bumerz Limited” in the Isle of Man. A year later, Bumerz Limited received all shares of “Pal Shipping Trader One Co Ltd” in Malta, the last of the Erdoğans’ publicly known offshore companies. With this purchase, they obtained an oil tanker called Agdash, and also secured a $18.4 million loan from Parex Bank in Latvia (later, Citadele).

The loan deed was signed by İlgen, as the director of Bumerz Limited and as the owner of Pal Shipping Trader One, in the presence of Azerbaijani businessman Mubariz Mansimov, with the seal of Azerbaijan’s consulate in Istanbul (see pages 7 and 26).

According to the research by The Black Sea on Malta’s registry of companies, the Erdoğans never paid a penny for the Agdash, a ship worth $25 million. Instead, it was Mansimov who operated it and paid off the loan.

So, the 2011 sale of the Erdoğans’ family company in Turkey, Bumerz Denizcilik, to Sıdkı Ayan, an oil tycoon with close ties to the government, must be only on paper because İlgen kept signing Malta company records on Agdash well until February 2015, hiding behind three offshore companies in two tax havens.

Ayan’s ASB Group did not respond to our questions, but his son, Bahaddin Ayan, sent a press release quoted by the Hürriyet newspaper as saying Bellway Limited never received money from Erdoğan’s relatives.

That is exactly the point.

Why did Mansimov and Ayan, two businessmen with interests in Turkish energy deals, keep paying off Erdoğan family loans and sending them money for a ship they never owned?

This is a question that now must be asked by a prosecutor.

We can instead go on by asking why the public broadcaster, TRT, cut off its live feed when Kılıçdaroğlu revealed the Erdoğan family’s offshore deals; and why Turkey’s internet authority blocks access to news articles on corruption.

We should ponder why even private Turkish news channels, such as NTV, CNNTurk and HaberTurk, cut their live broadcasts when a CHP deputy began to share the documents at a press conference.

We must also get very worried when a group of journalists invited to a TV debate on CNNTurk to discuss Erdoğans’ business affairs, instead produced conspiracy theories about how “foreign intelligence services” are feeding these documents to Kılıçdaroğlu to “create chaos in Turkey”.

They could instead pay £15 to the Isle of Man company registry service and answer the title question for themselves.