Turkish Lira Blows Out As Graft Scandal Comes Back With A Vengeance

Tyler Durden's picture


As we reported previously, on Monday new revelations in the graft scandal surrounding Turkish PM Erdogan in the form of a leaked phone conversation between him and his son, Bilal, detailing plans how to hide huge sums of cash, by some estimates up to $1 billion, brought back the political crisis that has gripped the nation front and center, and led to renewed demands by the opposition party that the PM resign. It also sent the USDTRY surging to levels not seen in weeks. We said: "Somehow we doubt that Erdogan will resign, however, this latest confirmation that the graft scandal that is and will continue to dodge the Turkish Prime Minister is not going away, may just be the catalyst that pushes the TRY, and with it some of the other recently pacified EMs, back into volatile mode." Today the crisis is fully back and so is the predicted volatility, with the Lira blowing out by another 400 pip to a level of 2.240, not seen since the first week of February when the Turkish central bank was scrambling to restore confidence in the imploding currency.


What prompted this latest risk flaring? Several things. As Turkish media outlet Hurriyet reported, Turkey’s main opposition took to the streets of Istanbul on Feb. 26 to throw away millions of fake bills, in protest against the latest leaked voice recordings incriminating Prime Minister Recep Tayyip Erdo?an and his son.

In the call, apparently made in the wake of the Dec. 17 graft investigation, the prime minister and his son can be heard desperately trying to hide considerable amounts of cash.


“Everywhere is bribery! Everywhere is corruption!” shouted the demonstrators, a chant coined following the graft scandal, in reference to the symbolic slogan of the Gezi Park protests, while urging the government to resign.


The Republican People Party’s (CHP) candidate for the Istanbul mayoralty Mustafa Sar?gül used harsh language targeting the government over the revelations.


All across Istanbul you can see billboards of the prime minister saying ‘strong will.’ Here is a test of your will. Either you prove [that you are not guilty] or you resign and go,” Sar?gül said, referring to the campaign launched by an NGO close to the government after the corruption scandal surfaced. Huge posters of Erdo?an with the motto “strong will” can be seen across Istanbul, plastered near main arteries, on construction buildings and even on stadiums.


The fresh tape, leaked onto the Internet late Feb. 24 and allegedly featuring four phone conversations, is significant for being the first source to implicate Erdo?an personally in the vast corruption scandal.


The recordings feature Erdo?an and his son discussing how to get rid of a sum of cash equivalent to 2.2 billion Turkish Liras, according to the opposition. In one part of the alleged recording, the son, Bilal Erdo?an, is heard saying that he still needs to dispose of 30 million euros.


In a clear reference to the tape, CHP officials handed out fake money amounting to 30 million euros during a demonstration near Taksim Square, throwing the paper banknotes in the air like confetti.


“We are ashamed of this situation. Those 30 million euros are only a small share of the amount of cash that the prime minister told [his son] to ‘clean’ on Dec. 17. There is also the mother share. Think about how huge that must be,” said the CHP’s Istanbul provincial head, O?uz Kaan Sal?c?.


Erdo?an has virulently rejected the voice recordings on Feb. 25, calling them “fake” and denouncing as a “montage.” CHP head Kemal K?l?çdaro?lu has claimed that they are “as authentic as the Mount Ararat.” The Ankara Prosecutor’s Office has launched an investigation into the tapes, following a request from the ruling Justice and Development Party (AKP).

As we said on Monday, "since Erdogan has already eliminated any judges that are not sympathetic to his regime, the question of how much justice will be revealed is irrelevant." However, in an indication of how desperate the government is to redirect attention from this latest scandal, a follow up article from Anadolu news agency, reported that a Turkish attorney, Hudaverdi Yildirim, has filed a complaint to Istanbul Chief Prosecutor's Office against Fethullah Gulen on Wednesday, asking him to be tried of crimes such as, "forming an organization", " an organized coup attempt" and "organized deceit”.

Yildirim claimed in his petition that national ‘economic secrets’ and the activities of National Intelligence Service (MIT) were disclosed and an illegal chase was launched.


Referring to the December 17 anti-graft operation, Yildirim said: "National secrets were disclosed at the end of the anti-graft operations, which were illegally conducted and the country's economy was damaged by around US$ 200 billion."


Crimes of treason, a coup against a legal government, qualified deceit, and abuse of power were committed at the same time and by the same people, alleged the petition, adding that Fethullah Gulen, “used his political and moral power on prosecutors, by which he becomes instigator of the prosecutors that target legal government”.


The attorney demanded Gulen and his allies be tried of crimes of "forming an organization", "an organized coup attempt" and "organized deceit and abuse of power."


An anti-graft operation was launched on December 17 in Turkey, which resulted in the detentions and arrests of high-profile bureaucrats, including the sons of three former cabinet ministers and businessmen.


Turkey’s government claim it is targeted by a group within the state that has international links. Prime Minister Recep Tayyip Erdogan and senior government officials have blamed the group for ‘attempting to run an agenda of its own with the December anti-graft operation’.

Recall that Gulen, a dissident who currently lives in Pennsylvania, was the person whom the government accused of staging the graft probe which revealed just how deep the government corruption rabbit hole truly goes. That the PM is willing to go all the way in this latest scapegoating persecution perhaps confirms just how concerned the administration is, even if for the time being nothing dramatically has changed except for ever bolder revelations of just how much theft and corruption the current Turkish regime has engaged in.

Finally, should indeed the central bank once again lose control of Turkish FX rates, and should the EM crisis once again return, perhaps the DE Shaw correlation algos will finally realize just how far ahead of themselves they have gotten by simply chasing various carry funding currency pairs as an indicator of "fundamental" value.

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TeamDepends's picture

Is there one country on this globe, even a tiny one, that isn't ruled by scum sucking sewer rats?

Son of Captain Nemo's picture

That's why the banker establishment needs to die by mysterious causes in order to "start the new chapter".  Proudly 12 and counting...

But my idea requires extremely large crowds that congregate in major banking centers and Capitals around the globe with guillotines.

john39's picture

Looks like the US/Israel alliance has decided to throw their tool Erdogan under the bus...  who is next? i would bet on the Saudis.

jbvtme's picture

why the sudden lust for the dollar today?

Indian_Goldsmith's picture

Blow bly blow account on zh. 

Muddy1's picture

And how convenient it is that Trukey's problems cause in uptick in US Treasurey's?

Tabarnaque's picture

I would guess "flight to safety" by the momo trade. Plus some more FX manipulation by hTPTB. It won't last.

BLOTTO's picture

No TD...we've been inflitrated by 'them' in all places and at every level.


Thats what happens when we are ruled by ancient occult royal bloodlines from the Mother of All Family Trees that have been ruling us since day 1.


'I'm breaking in, shaping up, then checking out on the prison bus -This is it, the apocalypse

'Welcome to the new age, to the new age
Welcome to the new age, to the new age
Whoa, oh, oh, oh, oh, whoa, oh, oh, oh, I'm radioactive, radioactive'

-Radioactive, Imagine Dragons


john39's picture

'oh no, must be the season of the witch'- donovan.


bet on it.

Ahmeexnal's picture

You silly lulu amelu, please go back to your slave chores.

DonutBoy's picture

Of course!  The Jews did it.

Unknown User's picture

Don't give Erdogan ideas...

alien-IQ's picture

Not unless Tesla has started making battery powered stealth bombers.

Kirk2NCC1701's picture

I rather suspect that this is all part of reeling in Erdogan's leash, in case he has any ideas of Aiding & Abetting "The Other Side" (Russia, Iran).  You can bet your ... that the timing of this and the Ukraine uprisings is not a coincidence, but a well-synchronized CIA+NSA operation.

Looks like Erdo is getting squeezed from both sides (East and West) and trying to walk the middle line for his country, while still being a "good businessman", and looking after the interests of his family and friends.  Just like our guys on Wall St and DC do. 

Erdo is no different than our scumbags.  He just has worse PR and MSM connections than our scumbags.  It's tough to compete against the US propaganda machine, aka MSM.

DoChenRollingBearing's picture

Turkey, the Ukraine & Russia, Iran, Syria, Pakistan, Greece (PIIGS+F), China on the hurt, Latin America on the hurt.  Something could easily slip out of control.

This will another interesting year.  Maybe THE most interesting year yet.


Unknown User's picture

Oh, it's going down this year because they can't extend the QE longer than that.

Frostfan1's picture

My my my how the AIDS (Anti Israel Derangement Syndrome) members have changed from calling Erdogan a hero to a zionist tool in such a short time.   No one in Israel is crying one bit over the damage Erdogan did to himself after the way he put the screws to them over the boat affair.  The up arrows make me smile at how fly-by you AIDS members are :)

Frostfan1's picture

One thing to credit Erdogan for  though was letting the firefighters go to Israel and help out with the forest fires even during the heated time after the boat affair.

earnyermoney's picture

No need to associate rats with scum sucking sewer politicians.

Rip van Wrinkle's picture

It's called One World Government. Coming to a planet near you soon.

trader1's picture

and One World Currency.

then we'll be off to establish colonies on other planets ;-)

Unknown User's picture

Someone or something has to borrow more and more to support the exponential debt curve.

thunderchief's picture

Turkey is a great country for holiday.

Did it in 2009.

Summer 2014???

Parties on!!

knightowl77's picture

IceLand....they threw their scum sucking sewer rats out

Son of Captain Nemo's picture

Yes CNN doing it's job in Istanbul to cover it... "up" like nobody else can!

Truther's picture

Draghi fucked you up you turks, didn't he?

Dapper Dan's picture

"The world will soon wake up to the reality that everyone is broke and can collect nothing from the bankrupt, who are owed unlimited amounts by the insolvent, who are attempting to make late payments on a bank holiday in the wrong country, with an unacceptable currency, against defaulted collateral, of which nobody is sure who holds title."


john39's picture

bankers will settle for you as a slave, your daughters as whores and your sons for cannon fodder in their endless evil wars.  and consider themselves generous for having done so.

BLOTTO's picture

As long as we/you have good spirit, love and souls intact- we are more 'rich' then you possibly think...

Those material rich evil ruling fucks are 0 and 3 in that department^.


Us vs. them.


Mother Abagail:  It's time to make your stand.

thamnosma's picture

So one needn't resign political office when caught plotting the personal theft of a billion dollars?  What a great gig.

Pure Evil's picture

Obama got away with it.

Exactly how much did he launder through all those failed solar companies?

LawsofPhysics's picture

No, of course not. In fact, one might say that holding political office is a prerquisite for planning such a theft.  Just ask John Corzine.

Ban KKiller's picture

Somewhere the crooked accountants are lining up  jobs in the new Turkish "government". All educated in the States and interned on Wall Street. 

The world today...."Daytime Express".

pods's picture

Seems that most large central governments are corrupt to the bone.

Of course, the next election will fix that. It has nothing to do with an incestuous relationship between bankers and politicians.

People will never learn.

I will bet anyone 100 FRNs that the next government will be just as corrupt.



denverdolomte's picture

Can I bet you my bitcoins? /sarc

kchrisc's picture

How does one say, "Is it time for the guillotines yet?!" in Turkish?!

alien-IQ's picture

I guess this means a new all time high for the DOW?

ghostzapper's picture

Nothing to see here, move along.  All fiat currencies controlled by politicians and bankers are extremely sound and stable and "everything is fine".  Any updates on Bieber or what Facebook is up to?

kellycriterion's picture

The European nation state model evolved and had successes due in part to pooling of resources. Those scarcities of human and capital resources have declined radically compared to a few centuries ago. Conversely as world production capacity has exploded the centralized state engines of corruption, consumption incentives have exploded.

The Crime Syndicate Model which relies on corruption and deception and introduces force as a last resort has become scalable with so much more wealth to fund this approach.

The Central State as Crime Syndicate will last until the private sector is "crowded out" to the point it will no longer be able to create sufficient surpluses. Then it's back to more traditional force first approaches.

bluskyes's picture

"national secrets" = secrets with-held from the nation.

forwardho's picture

Who benefits from the release of these phone calls? They did not spring fully formed by themselves.

Who recorded them ?

How did they get into hands of opponents?

Why now?

Huge sums are being made on the fx markets on this situation, Far, far more than what this prick stole.

A nation falls into chaos with the flick of an electronic switch.


StychoKiller's picture

Umm, Snowden's former co-workers?