Turkey: 450,000 investors hit by funds scandal
In Turkey, a financial scandal has come to light that has left around 450,000 small investors fearing for their assets. The country's financial regulators liquidated 131 funds which had advertised exceptionally high returns but were apparently part of a Ponzi-like market manipulation scheme. The judicial authorities have launched an investigation and dozens of people have been arrested. The media discuss the knock-on effects and look for culprits.
No taxpayers' money for greedy victims
Investors must not be compensated using public money, Karar insists:
“The fund managers and their cronies have squandered money, and now we're all supposed to foot the bill? Did we share in the gains of those who, driven by greed for unimaginable, implausible returns, lost their money to swindlers? Did they share their profits with us, so that we should now share in their losses? ... It must be made clear that the losses will not be covered by our taxes. Otherwise we'll all end up footing the bill again. ... The ill-gotten gains must be wrested from the profiteers, down to the very last cent, and redistributed among those who have suffered losses. Let them make do with what they have and be content with that.”
Thorough investigation needed at any cost
The investment fund scandal is a test for the state apparatus, says pro-government newspaper Star:
“Will the affair be covered up or will it be investigated? To this extent, there will be a political price to pay for this scandal. ... It has now emerged that the irregularities in the investment funds had already been detected a year ago and that there had been specific reports, yet people at all levels within the authorities tasked with supervising the funds failed to impose any sanctions or take any action. ... Who bears responsibility, who covered it up, who turned a blind eye, and who are the unscrupulous individuals who lined their pockets with the public's money? This must all be brought to light no matter the cost.”
Istanbul’s financial reputation in jeopardy
Erdoğan faces a dilemma, Naftemporiki explains:
“If the investigation stops at the lower echelons of the hierarchy, doubts will remain as to whether political protection was provided. If it reaches higher up, the scandal could cause further casualties within the government camp. And so the 18-billion-dollar fiasco has taken on a much greater significance. It does not, at least for the time being, threaten to plunge the Turkish economy into a systemic crisis. But it does threaten to erode some of the credibility that Ankara has been trying to build up over the past three years. And for Erdoğan, who wants to present Turkey as a major economic power, Istanbul as an international financial centre and the country as a safe haven for foreign capital, this may turn out to be the biggest cost.”