Ahmet Ertürk: Siphoned money spent on social engineering

Ahmet Ertürk: Siphoned money spent on social engineering

Former Savings Deposit Insurance Fund (TMSF) President Ahmet Ertürk

February 03, 2010, Wednesday/ 15:55:00
Ahmet Ertürk has left a significant mark on Turkey in the last six years. Ertürk, whose tenure as the president of the Savings Deposit Insurance Fund (TMSF) began in the profitable month of January 2004 and ended in January 2010, played a critical role in uncovering a secret network of relations in the media-business-politics triangle in the recent past. Some of the most important steps to address the loss of money funneled from dozens of banks during the Feb. 28, 1997 postmodern coup, which was prompted by an outcry over reactionaryism, were taken during Ertürk’s period as TMSF president.

During his tenure, progress was also made in tracing the money that was funneled from banks to unidentified individuals and to finance secret activities. The TMSF’s performance over the last six years has not only changed the understanding of collecting public receivables, but also the belief that people who embezzle or siphon money can get away with it. Society has realized that people who use the nation’s resources for their own interests will eventually be held accountable.

Former Savings Deposit Insurance Fund President Ahmet Ertürk, whose tenure saw progress in tracing the money that was funneled from banks to unidentified individuals and to finance secret activities, has 28 ongoing lawsuits against him. Underlining that the period of profiting from intimidating public officials is over, he says, ‘Those who were waiting for my term to end should not get the least bit excited’

Certainly, this period was not easy. Ertürk says they had to put up a lasting fight to collect public receivables. This has resulted in 28 ongoing lawsuits against him. With his tenure coming to an end, he expects attacks against him to increase. Underlining that the period of profiting off of intimidating public officials is over, he says, “Those who were waiting for my term to end should not get the least bit excited.” Ertürk describes the economic practices planned for Turkey in coup scenarios that were discovered in recent years as “terrifying” and criticizes businessmen and large capital holders especially for not reacting harshly against these plans. Reproaching those who seek to benefit from such plans, he warns: “Everyone must be afraid of this paranoia. There’s no certainty about who will be the next target of such a sick state of mind. I am still waiting for strong reactions from the business world.”

Ertürk wants to work in the private sector in the new period, but his name is being mentioned in connection with positions at important public institutions as well. It’s obvious that the prominent bureaucrat, whose presidency at the TMSF will be remembered as a period when Turkey’s receivables were saved will continue to be in the limelight for the rest of his career. Ertürk discussed interesting details of his six years as the head of the TMSF as well his thoughts about his term.

The TMSF’s structure was changed shortly before you were made its president. Could you tell us a little bit about this process?

The TMSF was established in 1983 as a unit within the central bank. It was then transferred to the Banking Regulation and Supervision Agency [BDDK]. It became an independent institution with the passage of Law No. 5020 in December 2003. I became the first president after it became an independent institution. My term began on Jan. 29, 2004, and shortly afterwards, on Feb. 13, we started the Uzan operation. This had a tremendous impact and instantly made the TMSF a very popular institution. This event immediately put us in the limelight. The arduous operation against the Uzan family not only had an economic aspect, it also had a political aspect and a sensationalist aspect. We were mentioned in the economy pages as well as in the tabloid pages, and with this incident, we entered the media sector. After seizing the Uzan family’s media outlets, the TMSF became one of the most important media groups in the country.

Was the Uzan operation the most troubling during your term?

It was certainly the one that created the most noise. It was a group that had firms in many sectors. We faced a lot of challenges because they weren’t hesitant about using the media in a very effective and controversial way. I could say that before we officially started the task, we worked day and night on the legal actions that were going to be taken against the Uzan group. We went through a preparation process that lasted several days and nights. We created an exceptional model. It is for this reason that after the operation the Uzan companies did not lose value but instead became more valuable and we were able to sell them for very good figures. We had to work on very fine details. There were two television channels, Telsim and a daily newspaper, and none of these could withstand being interrupted for a single second. The intervention had to be carried out smoothly. Any interruption in the telephone operator or any problem with the television channels would make the company’s value go down. We took all of these issues into consideration. We planned everything, from who would be appointed as managers to the technological infrastructure, and there was no interruption in the services. For example, we weren’t the cause of the interruption in the broadcast of Kral TV. When we took it over the Radio and Television Supreme Council [RTÜK] shut down the channel because the Uzans hadn’t paid their fees to the RTÜK. During the operation, we also had to solve the financial problems created during the Uzan period. Uzan was in the habit of not paying money to anyone, and no one had the courage to say anything to him. He was not able to fulfill his obligations regarding the cell phone company. He wasn’t paying money to his foreign suppliers. There were creditors inside the country. It is for this reason that this operation required a lot of courage and preparation on our side.

Your actions were generally against bank owning media bosses. What effects did the entry of media bosses into the finance sector have on the Turkish economy?

Two critical power centers that affect the society are banks and the media. When we look at other examples in the world, it is better not to have both sectors be controlled by one hand. These two powers are used as a check and balance against each other. But this did not happen in Turkey. Either those who owned media firms got involved in banking or vice versa. The purpose was to support the banks with the power of the media. This was a way of thinking that damaged financial principles and the economy. What was critical was that the Turkish political system turned a blind eye to this and even attempted thrive on these imbalances to obtain political power. But this did not benefit the public and eventually caused serious damage. These mistakes were ignored and even applauded. These unbalanced structures created a heavy burden for all of us. Turkey’s level of prosperity was affected. Turkey lost wealth and value. All of these things had costs. Political actors paid the price politically. We made sure the other costs of the game were paid as well because that was our legal obligation. It was our responsibility to get the country’s stolen money back. Until that point, people had gotten away with things like this. A habit of doing such things had formed, and it had become Turkey’s illness. This was a situation that lulled society and put it in a state of despair. But we changed that.

After the dust settled from the Feb. 28 postmodern coup, we realized that money from dozens of banks had been funneled. What were your findings about the Feb. 28 coup and its financial dimension?

Prior to Feb. 28, there was a process that brought Turkey to that point. The groundwork for Feb. 28 was laid beforehand. Political imbalances and economic imbalances fed off each other, and this process turned into a race to obtain gains. Politicians used economic imbalances and economic circles used politics to obtain undeserved advantages. An important stage in this process was the unusual interventions in the democratic system. The most important attribute of the democratic system is that it envisions transparency and accountability. Behind closed doors, you can put any kind of scenario into force. In an anti-democratic structure, you can do anything from social engineering to financial engineering. During the Feb. 28 process, both of these kinds of engineering were carried out simultaneously. One tried to redesign the society for its own sordid interests and the other tried to redesign the economy for its own sordid goals. They supported each other and resulted in Turkey losing a substantial amount of assets. It was a blow, not only to the system and politics, but also to the economy.

Major benefits can be obtained from a closed economy structure.

When we look at bankrupt banks, we see that these banks had a process where certain corrupt businessmen were given banking licenses, were put in charge of banks or their mistakes were excused. These practices point to the existence a preplanned scenario, not to an innocent practice. Sometimes you can feel and sometimes you can see this. When you analyze some bankrupt banks, you come across a loss that cannot be explained. There are secret, hard to detect embezzlements. I suppose a portion of the embezzled money was used for other purposes, in other words to redesign politics and the society. You see, under normal conditions, you can see certain items which lead to losses in state banks. There are items such as high interest payments, nonperforming loans and operational expenses. These are the kinds of losses that can be explained. When we examined the records of these banks, we saw that even when we add up all these items, the loss is greater than the total of these items. This shows that some of the money went to secret or unidentified places. We identified these secret payments, but it is very difficult to find what the money was spent on by examining the records. When I think about this topic, I think the money was used to achieve certain political goals, to finance certain groups and to finance social engineering, provocative and dark activities.

How many banks siphoned money during this process in total?

Between 1994 and 2003, 25 banks were transferred to the fund. The state paid $30 billion in order to cover the deficits of these banks. The Treasury had to obtain foreign loans with high interest rates to fund these deficits. When calculated in aggregate with interest, the total figure grows to $60 billion. This does not include the losses of the public banks. The cost of maladministration and abuse in public banks with the pretext of operational losses was $25 billion. We managed to collect up to $18.5 billion of this money. And we are expecting to collect another $3 billion. Thus, the total amount of our collections will be $21.5 billion. This was made possible with the autonomous structure and dedicated efforts of the TMSF, but the process was not an easy one. We had to fight hard in order to collect this money.

You say that financial sectors and the media should take a stand for democracy in critical periods. What can you say about the position of business circles and the financial sector in connection to the latest coup plot?

The economic understanding of coup plans no longer exists, even in dictatorial regimes. Even the very existence of these plots damages Turkey’s credibility in the international arenas. Those businesses that fail to raise their voice against these plots deserve to be condemned. Actually, they must be the first to raise their voice in protest. Currently, we are trying to deal with those who committed the most unethical acts within the boundaries of the legal system. On the other hand, those who prepared these plots think about closing down companies for purely ideological reasons. How can this be? I still expect business circles to have strong reactions. Indeed, such a mentality will shake not only certain companies, but the entire country. It will not take us to a regime when only certain companies will prosper.

But some expect to unfairly use this to their advantage...

There may be only a small minority that intends to do so. Those who refuse to object to these plots because of ideological justifications will suffer damage because of them. A mentality that disrupts the economy will hurt everyone. But if Turkey has been sentenced to ideological blindness and if there are people who expect to use it to their advantage, they should know that the time to do so has passed. Turkey is no longer a country which can be managed by the stupid scenarios of certain people. These scenarios are characterized by horror and stupidity. There is too much absurdity in them. They are imbued with a genocidal mentality and everyone must fear it.

I would like to ask what are your plans after leaving the TMSF?

I won’t pull myself completely out of business life. I may return to the private sector.

You’ve created many enemies during your term as president of the TMSF. What do you expect from those who are angry with you?

Currently, there are 28 cases against me. My position served as a minor deterrent because it gave me greater facilities to deal with my challengers. They may see my leaving office as an opportunity, but they should not grow too eager. My power will continue in another form. In the past, people could blackmail or threaten public officials to conduct their affairs in the manner they saw fit, but these periods are now a distant memory. I will not leave such a legacy behind.

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