February 5, 2015

Former BDDK president: Crackdown on Bank Asya threatens liberal economy

Tuesday's decision to take control of Islamic lender Bank Asya has been harshly criticized by Zekeriya Temizel, a former finance minister and the first president of the Banking Regulation and Supervision Agency (BDDK), saying publicly traded companies should not be used in quarrels between individuals and politicians in liberal economies.

In a free market economy, Temizel said, institutions are not involved in debates between individuals; if they are, it is hard to predict to where the chaos arising from the debates might extend, given these institutions are key figures in the economy.

Police raided the headquarters of Turkey's largest Islamic lender, Bank Asya, after a banking watchdog decided to take over the bank's management on Tuesday night, sparking reactions from the public. In addition to many other public figures, Temizel, who had been the head of the watchdog at the time that Bank Asya was given its banking license, also condemned the crackdown, underlining that the decision to take over management of the bank was illegal.

The BDDK handed the control of Bank Asya's board to the Savings Deposit Insurance Fund (TMSF), citing insufficient transparency to allow for proper regulation. However, Temizel said that according to banking law in Turkey, bank management can only be taken over if bank managers are caught using the bank's resources for personal use, if deposit holders lose money due to the bank's poor balance sheet or if the founding partners of the bank fail to meet eligibility requirements in order to remain partners. According to one of the founding partners of the bank, a month and a half ago the BDDK requested that privileged shareholders submit certain documents from the Land Registry and bailiff's office. After some of them failed to submit these documents since they had been overseas, the BDDK made the decision to take over control of Bank Asya management. Temizel maintained that it is not logical or consistent to take control of the bank just because some of the privileged shareholders failed to deliver certain documents to the BDDK.

Noting that he was in charge when Bank Asya applied to the BDDK for a banking license, Temizel asked sarcastically whether the founders of the bank had lost eligibility today, 15 years after founding their partnership. Temizel underlined that even the partners' failure to submit certain documents should not provide justification to hand over management of the bank.

Highlighting that the issue is a purely judicial case, Temizel said the officials who made the decision to take over the management of the bank will definitely face difficulty if they cannot prove that the partners failed to meet eligibility criteria in order to remain the founding partners. In the past, various banks have been seized after claims that their managers caused losses in individual accounts or they appeared to have derived unearned profit from bank resources, Temizel said. This, he claims, however, is the first of its kind -- the BDDK has intervened in the management of a bank citing the 18th article of the banking law.

A government whistleblower who uses the pseudonym Fuat Avni on Twitter and who is believed to be a senior government official said on Thursday that President Recep Tayyip Erdoğan is angry with BDDK officials because they decided to take over the management of the bank citing the 18th article rather than the 71st article of the banking law. According to Avni, the banking watchdog can only change the management of a bank using the 71st article. Fuat Avni has repeatedly been proven to be right about earlier information leaks about controversial legal changes, police raids on prominent media outlets and the unlawful dismissal of a number of police officers and prosecutors.

Published on Today's Zaman, 05 February 2015, Thursday