Turkish Lira Sinks After New Alleged Recording Reveals More Erdogan Corruption; Opposition Calls For Resignation

Update: a tweet by Abdüllatif Sener, Former Finance Minister and Deputy PM of Erdogan, confirm the authenticity of the recording:

Dinledi?im Ba?bakan?n sesidir, g?rtla??na kadar ailece yolsuzlu?a batm??t?r, art?k me?ru bir Ba?bakan de?ildir.

— Abdüllatif ?ener (@senerabdullatif) February 24, 2014

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It is almost remarkable that it was a few short weeks ago when the Turkish Lira was crashing to new daily record lows against all reserve currencies, and when Erdogan, embroiled in a bitter political corruption scandal, was firing judges and police officers left and right. Since then, things have quieted down, on the back of the return to surface calm across the broader Emerging Markets (even if nothing has actually been resolved fundamentally in the post-Taper era), however the Turkish graft scandal refuses to go away. As a result, today the Turkish Lira soared by over 200 pips following the release of a new recording which is allegedly a leaked telephone conversation in which the premier discusses plans how to hide at least $1 billion in cash (an amount which would buy about 20 Yanukovich-style presidential palaces) in the period when the Police was raiding various affiliated venues as part of a corruption investigation.

From Today’s Zaman:

In the new voice recording, Erdo?an and his son Bilal allegedly discuss during five wiretapped phone conversations on plans how to hide huge sums of cash on the day when police raided a number of venues as part of a corruption investigation that has implicated sons of three Turkish ministers, businessmen and chief of the state bank.


Today’s Zaman couldn’t immediately verify the authenticity of the voice recording. It was not clear if the sound that is similar to Erdo?an’s voice is real.


Prime Ministry released a forceful statement late on Monday, claiming that the voice recording is a “product of montage” and it is “completely false.” The Prime Ministry vowed in the statement to sue those who orchestrated this “dirty plot.”


The voice recording is the latest in a series of leaked phone conversations of embattled Erdo?an, who has portrayed the graft investigation as a plot to overthrow his government. In the voice recording, published on YouTube late on Monday, Erdo?an seems to be warning his son Bilal about cash money stashed in several houses. It was not possible to decipher from conversations how much money is involved and in how many houses this amount of money is stocked, but an introductory note at the beginning of the video says the plan involves at least $1 billion cash stashed in five houses.


The conversation allegedly took place on Dec. 17, when prosecutors ordered police to raid dozens of addresses to collect evidence. Dozens of suspects were arrested, including an Iranian businessman Reza Zarrab and chief of state bank Halkbank, Süleyman Aslan. Some of the suspects were later released.


At the beginning of the phone conversation, the prime minister briefs his son Bilal about the raid and asks him to “zero” the amount stashed at houses of several people.


In the second phone conversation, Bilal Erdo?an tells his father that they decided to distribute money to several businessmen whom they owe and “melt” significant part of it by paying for different projects. Some of the businessmen mentioned during the phone conversations include Faruk Kalyoncu and Mehmet Gür. Erdo?an approves their plan and reiterates that it is “better if they completely zero the money.”

Those interested can listen to the recording below:

Naturally, the government promptly condemned the recording as a fake, and the Prime Minister’s office released a forceful statement late on Monday, claiming that the voice recording is a “product of montage” and it is “completely false.” The Prime Ministry vowed in the statement to sue those who orchestrated this “dirty plot.”  Of course, 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. That said, we expect that someone will step up and vouch for the authenticity of the recording, in the process leading to even more political, and TRY, instability.

However, in the meantime, the Turkish main opposition Republican People’s Party (CHP) has said the Turkish government has lost its legitimacy and called on Turkish Prime Minister to resign immediately after Erdo?an’s voice recording surfaced online. CHP Deputy Chairman Haluk Koç said in a press conference on Monday that the government has lost its entire legitimacy from “this hour” and that Turkey cannot move forward with this “dirt.” The remarks by Koç came during an emergency meeting of the CHP Central Executive Board (MYK), where they discussed a new voice recording published online about a discussion allegedly between the prime minister and his son on their plan to hide $1 billion cash stashed at several houses.

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.


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