(Washington, D.C.) — The Turkish Democracy Project (TDP) has called on Citibank to clarify its association with Türkiye İş Bankası (Isbank). One of Turkey’s biggest banks, Isbank has recently come under state control and is led by CEO Ertugrull Senem, who has been implicated in corruption schemes and illegal money transfers.
In February 2022, TDP initiated a campaign calling on international banks to cease their associations with corrupt Turkish financial sector actors. TDP’s research has found that in addition to illegal money transfers and financial crimes enacted by its CEO, Isbank is a critical tool in President Erdogan’s campaign to place the Turkish financial sector under his regime’s kleptocratic control.
Citibank has a partnership with Isbank through a correspondent banking account, which manages international transfers, facilitates cross-border investments, and other transactions. Since November 2020, Isbank has fallen under the control of the Turkish treasury after the government confiscated a 28% stake in Turkey’s largest lender. The government’s seizure of the ownership stake violated the bank’s 1924 charter, guaranteeing that the ‘CHP’ opposition party maintain 28% ownership. The confiscation in 2020 is just one example of Ankara’s concerted efforts to apply unprecedented control over key financial institutions under the command of Erdogan and his Justice and Development Party (AKP), with the President even appointing himself Chairman of Turkey’s sovereign wealth fund and installing his son-in-law Berat Albayrak as economy tsar.
Isbank has been directly implicated in a number of scandals which throw light on the inner workings of President Erdogan’s Turkey. The CEO of Isbank, Ertugrull Senem, has been accused of overseeing an illicit money transfer scheme with economy tsar Albayrak to defraud the national treasury. Albayrak has faced further allegations of collaborating with ISIS to smuggle oil into Turkey while CEO of Çalık Holding, a firm that has benefitted from billions of liras in non-competitive state tenders. Albayrak was subsequently deposed as economy tsar for defying his father-in-law’s dogmatic insistence on maintaining low interest rates, a policy which has caused a 20 year-high inflation crisis and that has forced citizens to resort to bread lines.
Having identified significant financial, moral, and reputational risk for Citibank’s ongoing cooperation with Isbank, TDP sent a letter on March 22, 2022 to Citibank’s CEO Jane Fraser.
Commenting on Citibank’s lack of response and continued cooperation with Isbank, Ambassador Mark D. Wallace, CEO of the Turkish Democracy Project, said:
“Since President Erdogan took power, the Turkish financial sector has been gripped by rampant nepotism and entrenched corruption, in which system Isbank has become a linchpin. Citibank has an obligation to abide by its own stated principles and standards as an influential global financial institution, a duty which is incompatible with its cooperation agreement with Isbank.”
