Dec. 27 (Bloomberg) -- Turkey’s legal morass thickened after a prosecutor said Prime Minister Recep Tayyip Erdogan’s government is obstructing a graft probe by preventing detentions, disobeying court orders and allowing suspects to flee.
Istanbul Prosecutor Muammer Akkas said in a written statement yesterday that the investigation he was leading into businessmen and officials for involvement in bribery, rigging tenders, and fraud was stripped from him. Erdogan has said the probe is a smear campaign orchestrated by his opponents.
“This is a serious state crisis,” Bulent Tezcan, deputy chairman of the main opposition Republican People’s Party, or CHP, said in a phone interview. “The government is violating law in order to put the judiciary under control.”
Police refused court orders to search and detain suspects and the judiciary is under pressure, Akkas said. The complaint comes after more than 500 police chiefs were dismissed since the sons of three cabinet ministers were among dozens detained.
Foreign investors have dumped Turkish bonds at the fastest pace in two years as the scandal ensnared officials. Investors pared their holdings by $532 million to a three-month low of $53.8 billion in the week through Dec. 20, after selling a net $1.38 billion the week before, the central bank said yesterday.
The Turkish lira fell the most in more than three months to record lows against the euro and the dollar after Akkas released his statement. It rose 0.2 percent at 9:57 a.m. in Istanbul today. The yield on 10-year bonds surged 56 basis points yesterday to 10.61 percent, the highest in more than 3 1/2 years. The Borsa Istanbul 100 index tumbled 2.3 percent.
Turkey’s Supreme Board of Judges and Prosecutors said yesterday that a regulation passed last week requiring prosecutors to inform certain superiors of their investigations was unconstitutional. The new regulation was cited by Istanbul Chief Prosecutor Turan Colakkadi as a reason to remove Akkas from the case.
Police officers’ refusal to obey prosecutors’ orders, and the removal of prosecutor Akkas from the case, has blocked a next wave of searches and detentions against 30 people for corruption involving a financial sum of $100 billion, Zaman newspaper reported, without saying how it got the information.
The probe has become the battleground in a struggle between Erdogan’s followers and those of a U.S.-based imam, Fethullah Gulen. Erdogan’s supporters have lashed out at followers of Gulen for instigating the crackdown. The cleric broke with Erdogan this year, rupturing a partnership that has helped sustain the single-party government since 2002.
“There is an urgent need to solve this legal deadlock and restore rule of law,” Tezcan said.
Colakkadi denied government interference and said Akkas shared “inaccurate information with media.” The government began requiring prosecutors and police to inform superiors and administrative authorities before carrying out any detentions as of Dec. 21.
The Supreme Board of Judges and Prosecutors said in a statement that police must obey orders from prosecutors and exerting government control over judiciary process violates the constitution.
The deadlock comes after Erdogan replaced 10 of 26 members of his cabinet, tapping loyalists to help him fend off a scandal that claimed its first victims from his inner circle this week. His party asked its disciplinary board to expel three lawmakers for criticism of the alleged graft, NTV television said today.
The new cabinet is “based on loyalty, designed to restore discipline and for damage control,” said Nihat Ali Ozcan, an analyst at the Economic Policy Research Foundation in Ankara.
Six months after routing protests in Istanbul, the current battle may determine the fate and legacy of the 59-year-old premier ahead of elections next year.
“This is the independence struggle for a new Turkey,” Erdogan said Dec. 25. “Plots against Turkey will unravel.”
Erdogan said the probe amounted to an attempted coup. He told reporters on a return flight from Pakistan on Dec. 24 that his family may be targeted to tighten the political noose around him.
“They are targeting my son, implicating him through Turgev,” Erdogan said, referring to the Turkey Youth and Education Service Foundation run by his family. “They will be left empty-handed if they try to hit at Erdogan in this way.”
Erdogan Bayraktar, environment and urban works minister and an associate of Erdogan for two decades, sent markets tumbling this week by calling for the premier to follow him in resigning. Bayraktar, whose son was detained in raids that began on Dec. 17, said before quitting that Erdogan approved construction projects that are under investigation, in an unprecedented breakdown in party unity.
“The prime minister would need to resign only if allegations reach him,” Yasar Yakis, a former foreign minister in Erdogan’s administration, said in an interview.
Erdogan replaced Zafer Caglayan as economy minister with Nihat Zeybekci, a lawmaker for Denizli whose parliamentary biography says he was a businessman in the textile industry.
“For the first time since getting into office, Erdogan looks under siege and clearly on the defensive while unity within his party is starting to show some cracks,” said Wolfango Piccoli, an analyst with Teneo Intelligence in London. “If the pressure intensifies in the days ahead and the probe gets closer to him and his family, Erdogan may have to resort to snap elections to try to regain momentum.”
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