February 7, 2015

Bank Asya operation and violation of property rights

Erhan Başyurt

It became clear that temporarily taking over the management of Bank Asya is a politically motivated action lacking legal grounds.

Transfer of management of banks to the Fund (Savings Deposit Insurance Fund, or TMSF) is regulated by Article 71 of the Turkish Banking Law. For this to happen, “capital ratio must be inadequate.” It’s out of the question in the case of Bank Asya.

On the contrary, Bank Asya ranks third in the banking sector with a capital adequacy ratio of 18.3 percent.

Indeed, the TMSF and the Banking Regulation and Supervision Agency (BDDK) provide as ground for temporary takeover of management not Article 71 but Section 5 of Article 18 of the Banking Law.

According to this article, however, the TMSF can only use shareholder rights of “the shareholders with qualified shares who do not bear the conditions required for founders anymore.”

58 percent of the bank’s shareholders stated they had prepared the required additional documents.

On the other hand, the TMSF ignored the majority of shareholders and arbitrarily appointed a new board of directors. Although it had to submit the names of the new board members to the general assembly for approval, it did not do this.

The TMSF acted as if it did not temporarily take over the management but seized the bank.

What it did is a totally unlawful practice lacking legal grounds.

The BDDK and the TMSF commit a blatant crime.

Prof. Sami Karahan describes this act as unlawful, adding:
“I have been teaching banking law and commercial law for 29 years. I have never seen such an unlawful act, such a scandal.”
Republican People’s Party (CHP) parliamentary group deputy chairman, Engin Altay, evaluated the operation against Bank Asya with these words:
“What the government is doing now is bullying, illegal and banditry. There is no difference between robbing a bank’s cash boxes with guns and intervening in a bank with unlawful practices. Both of them are the same. They are banditry.”
Turkey has been openly violating since the Dec. 17/25 operation “the right to a fair trial, the freedom of expression and the freedom of the press” enshrined in the European Convention on Human Rights (ECHR).

And now it violates “property rights and the freedom of enterprise” as well.

We are incredibly moving away from universal legal standards and democracy.

Ergun Özbudun, professor of constitutional law, and Ersan Şen, professor of criminal law, also note that the present situation may cause Turkey to be penalized by international legal bodies and to pay a huge amount of compensation.

They are definitely right. There are actual examples before us. Turkey has been ordered to pay $4.5 billion in compensation for unfairly seizing Kentbank. Russia has been similarly ordered to pay shareholders of YUKOS more than $50 billion in compensation.

The right to property is an indispensable and fundamental principle of democratic societies and universal law.

Additional Protocol No 1 of the ECHR, signed and ratified also by Turkey, specifies universally adopted practices in this area. According to our Constitution, provisions of the ECHR have supremacy over Turkish laws.

Those interested in the issue can access – in the official websites of the Constitutional Court, Court of Accounts and the Council of State – articles examining many decisions by the European Court of Human Rights (ECtHR) on the violation of the right to property.

The ECtHR applies three criteria when assessing whether the right to property has been violated: legality, public interest and proportionality.

The intervention in Bank Asya violates these three basic principles.

There is no legal ground. People queuing to deposit money shows that there is no public interest, either. 58 percent of shareholders have met the requirements. The operation lacks proportionality as well.

Besides, Bank Asya has been continuously audited by 28 government examiners for a year now. Not a single illegal transaction has been detected.

“A Guide to the Implementation of the European Convention on Human Rights and Its Protocols”, written by Aida Grgic, Zvonimir Mataga, Matija Longar and Ana Vilfan and posted on the official website of the Constitutional Court, contains this important analysis:
“The obligation to respect the right to property under Article 1 of Protocol No. 1 incorporates both negative and positive obligations.

The essential object of this provision is to protect a person against unjustified interference by the State with the peaceful enjoyment of his or her possessions.”
Again, “A guide to the implementation of Article 1 of Protocol No. 1 to the European Convention on Human Rights” by Monica Carss-Frisk includes these remarks:
“An interference with the right to property must also satisfy the requirement of legal certainty, or legality.

Legal certainty requires the existence of and compliance with adequately accessible and sufficiently precise domestic legal provisions, which satisfy the essential requirements of the concept of ‘law’. In other words, the phrase ‘subject to the conditions provided for by law’ is not restricted to domestic law alone.

In a democratic society subscribing to the rule of law, no determination that is arbitrary can ever be regarded as lawful.”
All legal texts emphasize that violation of the right to property gives rise to a right to compensation.

BDDK and TMSF officials should urgently stop this unlawful act that seems to be initiated upon political instruction.

Not only the resulting huge compensation will be paid out of citizens’ pockets, but these officials will also face heavy penalties for going beyond domestic and international legal framework.

Published on BGNNews, 07 February 2015, Saturday