Documents from an excerpt of a recently published book have revealed that the son-in-law of President Recep Tayyip Erdoğan took most of the shares of a lucrative oil deal signed between Ankara and Arbil in 2011 and laid the framework for the transfer of Kurdish oil via Turkish territory.
This revelation is the newest in a long list of corruption allegations involving the president. Erdoğan is himself locked in a battle to ward off corruption charges that first came into the public spotlight after the commencement of a sweeping graft investigation two years ago.
The Hürriyet daily’s Washington correspondent, Tolga Tanış, delves into the details in his book “Potus ve Beyefendi” (Potus and Beyefendi), which pinpoints the background of a deal struck between then-Prime Minister Erdoğan’s government and the Kurdistan Regional Government (KRG) shortly after the June 2011 elections that propelled Erdoğan to power for the third time.
The book also categorizes Erdoğan as a “politically exposed person [PEP],” which is a term used in financial regulation describing someone who has been entrusted with a prominent public function or a close associate of that person. Due to their position and influence, it is recognized that many PEPs are in positions that can potentially be abused for the purpose of committing money laundering (ML) offenses and related predicate offenses, including corruption and bribery, according to a definition by the Financial Action Task Force (FATF).
The issue of transportation of Kurdish oil through Turkish territory generated a diplomatic rift with Baghdad, which accused Ankara of breaching relevant articles of Iraq’s constitution that regulate the oil trade, including redistribution of oil income through the central government and selling oil to third parties after obtaining permission from Baghdad.
Baghdad’s warnings went unheeded as Ankara inked a lucrative deal with the Kurdish administration, constructing new oil pipelines in an attempt to increase the daily oil flow from northern Iraq. For Baghdad, it was a clear violation of its sovereignty and constitution, and the move would encourage separatist feeling in Arbil. For Erdoğan’s government, however, it was just a business deal.
After he meticulously worked on details to build a coherent account in his book, Tanış reveals an underreported aspect of the story, in which Erdoğan appears as a central actor behind the oil deal. In his book, Tanış claims that it was Erdoğan’s son-in-law who was in charge of the Turkish company that controversially won the tender to distribute the Kurdish oil. Tanış painstakingly untangles the complicated web of relations and affairs that obscure the real ownership of the company, Powertrans, and argues that Berat Albayrak, who is married to Erdoğan’s daughter, Esra Albayrak, runs the operations of the firm that was granted the distribution rights for the Kurdish oil.
The company managed its operations by setting up new sub-companies abroad. Grand Fortune Ventures and Lucky Ventures are two companies that sprang into existence in Singapore. The companies own Powertrans. Albayrak at age 26 became CEO of the Çalık Business Group, owned by the Çalık family, which is close to Erdoğan. His lightning ascent to the pinnacle of power in the business world, Tanış argues, owes much to Erdoğan, who became personally involved in high-profile tenders and business deals to grant favorable shares to his family network.
Albayrak ran Powertrans’ oil operations while he was CEO of the Çalık Business Group. The company has so far earned nearly $700 million from its financial operations in Turkey. The book points to an emerging pattern suggesting that dozens of companies have recently sprung up after getting approval from the Cabinet, whose functions have been reduced to clear the way for establishing new firms in a short time. Patronage lay at the heart of this pattern, revealing politicians’ close connections to the business world, the journalist asserts in his book.
Tanış’s detailed account also reveals the network of business relations between the Erdoğan and KRG President Massoud Barzani’s family and other relatives, which helped overcome political disputes that once threatened to end in open confrontation between Turkey and the KRG in the 2000s. What opened the way for blossoming economic ties, the book claims, was the US-sponsored detente between Turkey and the KRG in 2007, leading to the establishment of the Turkish Consulate in Arbil in 2010. Erdoğan’s visit to the Kurdish region further cemented flourishing diplomatic ties, forging a new alliance between Arbil and Ankara to the envy of the central government in Baghdad.