Turkish Central Bank Governor Resigns Amid Massive Financial Scandal
Turkish Central Bank Governor Sahap Kavcioglu has resigned amid a major financial scandal involving massive fund liquidations, stock manipulation, and dozens of arrests.
Turkey's central bank governor, Sahap Kavcioglu, has submitted his resignation to President Recep Tayyip Erdogan following a massive financial scandal that has severely shaken the Turkish capital market. "In light of the recent serious allegations regarding banking regulation, supervision, and myself, I ask the President to accept my resignation," wrote Kavcioglu, who had held the post for about three years—a lengthy tenure by local standards.
The crisis erupted in mid-September when Pusula Portfoy, a major asset management firm, announced that some of its funds failed to honor investor redemptions on time. Consequently, trading screens on the Istanbul Stock Exchange plunged into deep red, forcing authorities to temporarily suspend trading on the BIST 100 index.
According to Turkish media reports at the end of August, approximately 129 billion liras, equivalent to about 2.7 billion dollars, were withdrawn from the company's funds. While Pusula is not classified as a giant by Turkish banking standards, it is a highly significant institution holding substantial public funds, including stakes in Katilimevim, a company enabling citizens to purchase apartments, vehicles, and assets interest-free and without loans. Furthermore, the firm operates in savings, retail financing, and owns the Islamic investment and finance bank Iktisat.
In response to the BIST 100 collapse, the Turkish Capital Market Authority liquidated 131 investment funds, and the case was transferred to the Istanbul Public Prosecutor's Office. Prosecutors launched an investigation into allegations of manipulative stock transactions allegedly conducted through fund activities, as well as suspected money laundering.
Korkmaz Enes Ergun, CEO of the Istanbul Stock Exchange, was arrested earlier this month as part of the widening probe, facing preliminary suspicions of membership in a criminal organization and accepting bribes. Investigators are examining whether stock prices on the Istanbul Stock Exchange were artificially inflated using specific investment funds, triggering last month's market crash.
By October 23, authorities had arrested a total of 100 individuals in connection with the scandal, and investigators are currently auditing the suspects' assets and financial transfers. The probe has also raised questions over whether the Istanbul Stock Exchange had issued 130 warnings to the Capital Market Authority regarding suspicious fund activities that were allegedly ignored. In response, the regulatory authority stated that the figures were inaccurate and that all submitted warnings had been duly reviewed.
