- Prosecutors allege central bank is ‘dominated’ by Gulenists
- Indictment is against the organization of U.S.-based cleric
Turkish prosecutors say the country’s central bank is dominated by people loyal to the cleric accused of orchestrating the July 15 coup attempt, the first suggestion the regulator might be caught up in the government crackdown that followed.
In a copy of an indictment against preacher Fethullah Gulen’s organization seen by Bloomberg, prosecutors cited as evidence the use of an image of Halley’s Comet on banknotes. The document, which runs more than 1,400 pages, makes one reference to the central bank allegedly being infiltrated by Gulen loyalists.
According to the indictment, Gulen followers use the comet symbol in organizations they have infiltrated. “The symbol of Halley’s Comet appears on all banknotes published by the central bank,” an institution that’s “dominated by” the Gulenist organization, the document reads. The bank declined to comment.
Although none of the 73 people listed as prime suspects in the indictment are bank employees, it is the first official suggestion that the central bank might emerge as a target in judicial probes of the Gulenist group. Investors are already worried that the bank may be prioritizing economic growth over inflation targets, and may be further unsettled if it is caught up in legal probes, said William Jackson, a senior emerging markets economist at Capital Economics in London.
“There are concerns about its independence anyway,” Jackson said by phone on Thursday. “If it were to be implicated in these political developments, then those concerns might rise and affect the lira in particular.”
The currency was trading 0.1 percent lower at 2.9391 per dollar at 11:01 a.m. in Istanbul after depreciating 0.5 percent on Wednesday. The comet symbol was introduced on banknotes in 2009, according to images on the central bank’s website.
The bank has come under frequent attack from politicians led by Erdogan, who wants borrowing costs to fall and once questioned where monetary policy makers’ loyalties lie. Although criticism fizzled out after Murat Cetinkaya was named the new governor in April, the government has continued to call for lower interest rates to stimulate economic growth.
Tim Ash, a strategist at Nomura International in London, was troubled by the prosecutors’ use of the word “dominate.”
“Do they really mean this?” he asked in an e-mail. “Do they understand the significance of the institution and throwing such words/language around and what potential impact this can have on financial markets?”
The indictment was filed before the attempted coup, and the case will go to trial in November, state-run Anadolu news agency reported July 22. More than 80,000 members of the military, judiciary and other state institutions have been suspended or fired since the takeover attempt was thwarted.
Gulen, a onetime ally of President Recep Tayyip Erdogan who has lived in self-imposed exile since 1999, denies involvement in the botched putsch. Public prosecutor Serdar Coskun, who filed the indictment, didn’t respond to calls made to his office in Ankara.