Turkey’s corporate crack-down: Erdogan’s asset grab? | Atilla Yesilada video

Analysis: The Drivers Behind the Corporate Crackdown

In a recent analysis, I explore the ongoing Turkish government crackdown on major corporations, which started in the autumn and has accelerated rapidly. While officially framed as a “clean hands” operation targeting tax evasion, money laundering, and narco-mafia links, I argue that the activity is driven by a mix of international pressure and significant political risk. The sweeping actions, which target everything from media groups and large holdings to electronic payment systems and asset managers, have rattled domestic and international markets.

The FATF Imperative vs. Political Design

A primary, legitimate driver for the acceleration is the need for compliance with the Financial Action Task Force (FATF), the global money-laundering watchdog. To avoid being relegated back to the “gray list,” Turkey must demonstrably plug regulatory loopholes. This explains the specific focus on electronic payment systems and brokerages, which have been widely used as conduits for illicit funds, including narcotics trade proceeds.

However, the rapid transfer of seized assets and management to the Turkish Deposit Insurance Fund (TMSF)—often without a court mandate—fuels the gravest suspicion: that the operation serves as a political mechanism to reshuffle Turkish private capital. The fear is that President Erdoğan may use the legal ambiguity and lack of judicial independence to seize cash-rich, legitimate businesses to reward his struggling cronies, many of whom are starved of revenue from new mega-projects.

Investor Climate and Confiscation Risk

The corporate turmoil is severely impacting business sentiment, already challenged by high interest rates and overvalued currency. The most significant threat is the rise of “confiscation risk.” In a country where laws are vague and the judiciary is not reliably independent, there is a pervasive fear that even law-compliant firms could be targeted if their assets are desired by the ruling establishment. This risk is already translating into anecdotal evidence of Turkish firms diversifying assets abroad, leading to precious capital flight and potentially lowering Turkey’s long-term growth rate.

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