A Turkish parliamentary committee on Wednesday approved a bill allowing interim repayments to investors and the recovery of assets in a fund scandal involving nearly half a million people, as officials disclosed efforts to trace money in 29 countries.
The nine-article measure cleared parliament’s Planning and Budget Committee and must still pass the full legislature before becoming law.
The crisis erupted in mid-September when investment funds, which pool investors’ money to buy shares and other assets, could not meet withdrawal requests amid investigations into suspected market manipulation.
The Capital Markets Board (SPK), Turkey’s securities regulator, ordered the liquidation of 131 funds managed by seven companies on September 17, requiring their assets to be sold to repay investors.
Those funds had 455,758 individual investors, although that figure does not represent the number still awaiting payment.
The bill would permit interim payments of up to 1 million Turkish lira, about $20,000, per eligible investor, subject to available cash and limits based on each investor’s net contributions and fund holdings.
If the money available is insufficient, the SPK could prioritize investors with the smallest net contributions or set a lower initial payment, with advances deducted from final settlements.
The legislation would also allow the Savings Deposit Insurance Fund (TMSF), the state agency managing assets under trusteeship, to pursue those responsible for losses and sell certain seized assets before trials conclude.
Portfolio management companies would bear primary responsibility for losses, while other people and companies found responsible could be required to cover amounts that cannot be recovered from the fund managers.
People who withdrew gains exceeding inflation-adjusted investment amounts would be able to return the excess voluntarily, while investors found to have participated in market manipulation or insider trading would be excluded from payments under the scheme.
Repayments would come from fund assets and money recovered from those responsible rather than the Treasury, Ersan Aksu, a lawmaker from President Recep Tayyip Erdoğan’s ruling Justice and Development Party (AKP) and one of the bill’s sponsors, told the committee.
Payments have already begun under existing liquidation rules, with 6.4 billion lira, about $130 million, transferred to 43,643 investors in funds managed by A1 Capital, Bulls and Pardus last week.
Erdoğan pledged on Monday that eligible investors would begin receiving interim payments this month once parliament passes the legislation.
Along with the repayment arrangements, officials outlined an effort to locate assets abroad, with the Financial Crimes Investigation Board (MASAK) submitting 48 information requests to 29 countries concerning 278 people and companies, Deputy Finance Minister İlhan Hatipoğlu told lawmakers, the state-run Anadolu news agency reported.
The requests cover accounts, cash and cryptocurrency, while prosecutors are pursuing cooperation with foreign counterparts to recover assets linked to offenses under investigation.
The committee also heard that state-owned Emlak Participation Bank would acquire Katılımevim and Birevim, two savings finance companies, along with İktisat Participation Bank, without paying a purchase price.
Shareholders would transfer real estate to the companies without payment to strengthen their capital, Aksu told lawmakers.
İktisat’s application to begin banking operations had been put on hold because of developments in the fund market, Şahap Kavcıoğlu, head of the Banking Regulation and Supervision Agency (BDDK), told the committee, the Dünya newspaper reported.
The bank received establishment approval in December 2024 but had not opened customer accounts or begun operating, Kavcıoğlu explained.
Questions about the regulators’ response have also reached the former SPK leadership, with Finance Minister Mehmet Şimşek on Wednesday authorizing prosecutors to investigate İbrahim Ömer Gönül, who chaired the regulator until April, over allegations that he failed to fulfill his duties.
The legislation advanced after the AKP and its ally, the Nationalist Movement Party (MHP), on Tuesday rejected opposition motions for a parliamentary inquiry into political connections and regulatory failures behind the crisis.
Asset restrictions continue for 109 suspects, prosecutors confirmed Tuesday, explaining that correspondence sent to financial institutions had omitted earlier decisions lifting restrictions on other people and did not represent a new freeze order.
Businessmen with connections to the AKP feature on that list, along with Emrullah Furkan Gün, a former SPK department head who became a Tera investment executive, the Nefes newspaper disclosed Thursday.
The scandal has already cost former family minister Fatma Betül Sayan Kaya her AKP leadership post and party membership after allegations that she and her husband profited from share transactions before the crisis, while both denied wrongdoing.
Further changes to the cabinet, party leadership and bureaucracy could follow an examination by the State Supervisory Council (DDK), a presidential oversight body, unnamed AKP sources told the pro-government media.
The fallout is also being felt in business payments, with some companies citing money trapped in funds to postpone supplier bills and wages, industry representatives told the Ekonomim news website, which examined the issue Thursday.
The representatives cautioned that some firms may be using the crisis as an excuse to delay payments, making it difficult to distinguish losses from attempts to extend payment deadlines.
Reporting on the scandal has also brought criminal proceedings against journalists, with Şaban Sevinç and Mustafa Balcı jailed pending trial on October 9 and İsmail Saymaz and Murat Ağırel put under house arrest the following day on accusations of publicly disseminating misleading information. Journalist Bahadır Özgür was also detained today over his coverage of the fund scandal.
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