The Turkish Democracy Project (TDP) has called on Wells Fargo, the American multinational banking giant, to clarify its association with Türkiye İş Bankası (Isbank), a Turkish bank that has recently been placed under state control and whose CEO, Ertugrull Senem, was allegedly involved 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 has become central to President Erdogan’s efforts to bring the Turkish financial system under his regime’s kleptocratic control.
Wells Fargo currently maintains a correspondent banking account with Isbank, managing international transfers, facilitating cross-border investments along with other transactions. In November 2020, the government confiscated a 28% stake in Isbank, Turkey’s largest lender, and handed it to the Treasury. This seizure of shares violated the bank’s 1924 charter, which guaranteed 28% ownership by the ‘CHP’ opposition party. The move forms part of a concerted strategy to exert unprecedented control over key financial institutions by Erdogan and the ruling Justice and Development Party (AKP), including the Turkish President’s self-appointment as Chairman of the sovereign wealth fund.
Isbank’s CEO, Ertugrull Senem, engaged in illicit money transfers with Berat Albayrak, Erdogan’s son-in-law, who was installed as Minister of Treasury and Finance before being ousted for defying the President’s dogmatic adherence to low interest rates (despite spiralling inflation that has left citizens resorting to bread lines). While CEO of Çalık Holding, a firm which has benefited from billions of liras in noncompetitive state tenders, Albayrak was implicated in an alleged scheme in collaboration with ISIS to smuggle oil into Turkey. In 2019, President Erdogan and his government were directly implicated in the Halkbank scheme to launder Iranian oil money in violation of international sanctions.
In November 2021, Turkey was added to the Financial Action Task Force’s ‘grey list’ for its failure to combat money laundering and terrorist financing, subjecting the country to immense scrutiny. Erdogan has taken little action to combat serious financial crime. Instead, sanctions evasion, illicit finance, and tax evasion go largely unreported and unpunished.
Having identified significant financial, legal, and reputational risk for Wells Fargo’s ongoing cooperation with Isbank, TDP sent a letter on February 11, 2022 to Wells Fargo’s CEO Charles W. Scharf.
Commenting on Wells Fargo’s lack of response and continued cooperation with Isbank, Ambassador Mark Wallace, CEO of the Turkish Democracy Project, said:
“Under Erdogan, the Turkish financial sector has come to be defined by rampant nepotism. Isbank, now firmly under President Erdogan’s thumb, embodies this entrenched corruption. Wells Fargo must comply with the principles and standards expected of a mature and respected international institution, and immediately end its banking cooperation agreement with Isbank.”