February 6, 2015

Bank Asya raid can be subjected to international rights courts

Legal expert Dr. Sami Karahan warned that the illegal and unjustifiable management overhaul of publicly traded participation bank Bank Asya may make the state liable in international courts.

“The aftershocks will be grave. This case will go to the European Court of Human Rights or be judged as a hate crime, thus opening the case up for a possible hearing at the International Court of Human Rights," stated Marmara University Law Professor Dr. Sami Karahan. As the professor notes “None of the conditions which would justify the take over the bank’s board.”

Amidst much political pressure directly from President Recep Tayyip Erdoğan, Turkey’s banking watchdog, the Banking Regulation and Supervision Agency (BDDK) ordered the takeover of Bank Asya’s board on the premises that the founding partners of the bank had lost their status, and that necessary documentation had not been sent on time, further claiming a lack of transparency. Apart from being in the least a dubious argument, nonetheless “the financial structure of the bank was not in any risk which would call for a board overhaul.” As a matter of fact Bank Asya’s capital adequacy ratio had been 17.5%, well above the banking sector average.

President Erdoğan may feel unrestrained or bound much by capital markets laws and fundamentally basic principles of financial markets. After almost a year of issuing wrongfully speculative and defamatory statements - claiming that Bank Asya was going to go under - and publicly ordering the BDDK to hurry up and take over the bank, his wishes were finally granted on Tuesday night when police stormed into the bank's offices, handing the bank’s management over to the state-controlled fund.

However, while domestically there seems to be little in the way, past cases of similar unjust takeovers have cost countries like Turkey. To this end the Marmara University Law Professor highlights three examples.

Violations in the 2001 seizure of Kentbank of Süzer Group by the BDDK had almost cost Turkey $4.13 had Turkey not settled with Süzer Group. The trial over Demirbank in the European Court of Human Rights is still continuing. Similarly in Russia the ECHR ruled that the government to pay defunct oil company Yukos $50 billion.

However the case of Bank Asya has much more to it than board rooms, ownership structures, and capital adequacy ratios. Apart from the general politics, there is a vendetta of Erdoğan against the Hizmet Movement of followers and sympathizers of Islamic scholar Fethullah Gülen. Bank Asya is seen as the cornerstone financial establishment of the movement.

Erdoğan has been on an assault, described by critics as a witch hunt against the movement, audaciously blaming it for orchestrating a late 2013 graft probe.

The President has vowed to take the movement down, and has conducted similar crackdowns on aid organization Kimse Yok Mu, outspoken press establishments Zaman daily and Samanyolu Broadcast Group, along with private teaching institutions.

Given that the target is members of society this poses an even bigger problem. “They are trying to seize possessions of a congregation simply because of its thoughts and beliefs,” noted Karahan adding this is a violation of human rights and “will end up in the International Court of Human Rights, in the Hague."

Published on BGNNews, 06 February 2015, Friday