The topic of Turkey’s Oil-for-Gold ‘deals’ has not been far from our thoughts over the last few years (here, here, and here) but as Bloomberg reports, after accessing a report leaked on March 14 of a network that spanned Turkey, China, Dubai and Iran, the plot reveals “one of the most complex illicit finance schemes [prosecutors] have seen.” It included the classic money-laundering techniques of over-invoicing and false invoicing (exactly as in the case of the Chinese commodity financing scandal underway) but the secret government plan to juice Turkey’s exports goes much deeper; and if you think that the exposure of this scheme is slowing Turkey’s manipulation, think again. Turkey’s trade balance continues to fluctuate unpredictably as gold stocks flow out of the country in bursts.  “Turkey’s going to continue it,†the Turkish economy minister said. “If those casting aspersions on the gold trade are searching for immorality, they should take a look in the mirror.â€
here But in 2013, with a plunging currency, surging inflation, slowing growth, and specter of rapid QE-driven hot money outflows leaving his nation desperate; Zafer Caglayan, the minister in charge of Turkey’s $800 billion economy decided that the only way to ensure success in the looming election… was to cheat…
as Bloomberg reports
…Caglayan described the [trade] gap as unsustainable and said the government would take steps to improve it.
What he didn’t mention was a clandestine export-boosting operation started up more than a year before that was helping to solve the trade imbalance.
At the time of the television appearance, it was still underway. Three weeks before, Caglayan had been secretly taped by national-police investigators telling his collaborators to find a way to increase exports by at least $1 billion a month. His orders came from the top in a two-hour meeting with Prime Minister Recep Tayyip Erdogan, he told an associate.
The operation featured an Iranian-born businessman who liked fast horses, faster cars and the fastest planes. His unique skill: Getting gold into sanctions-encircled Iran. Enough gold that for a time he became the government’s key instrument in improving Turkey’s irksome economic imbalance.
Turkish judges and police were investigating this farce when, as we noted here, the judge in charge of the affair was mysteriously re-assigned (or fired) and in the run-up to March municipal elections this year, the prime minister decried the inquiry as an attempted coup. but their findings were leaked…
How a team that included Turkey’s economy minister sought to manage the current account deficit, as the gap is called, by juicing exports to Iran is laid out in a 300-page document prepared by Turkish investigators in 2013.Caglayan and his collaborators also came away with tens of millions of dollars in bribes, according to the document, which has been cited in parliament by opposition lawmakers.
What the enquiry found is incredible; and makes any economic analysis of Turkey’s condition entirely useless…
