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How to engineer a financial gallows

Turkey’s idiosyncratic form of financial engineering involved the creation of a web of corruption linking the governing elite, through the state banks, to its cronies. The private banks fed well off the massive government debt this generated. Then, in February, they hit the wall in a liquidity crisis that lopped more than 30% off the value of the Turkish lira.


In November last year the general manager of the state-owned Halk Bankasi, Yenal Ansen, appeared on a television programme where viewers are invited to take part by submitting their questions via fax.

The fax machine started whirring and ejected a page containing six questions. The fax was signed by two government inspectors, the secretary general of the State Inspectors Association, Atalay Erguven, and its chairman, Fazli Koksal. They asked Ansen if it was true that he was on trial for allegedly authorizing illegal loans. They also wanted to know if it was true that Halk Bankasi's 1998 non-performing loan portfolio had exceeded $1 billion, including loans granted to banks that soon afterwards became insolvent.

The interviewer passed the fax to Ansen without reading it out to the audience. Ansen glanced at it and, without answering the questions, put it into his pocket.

The following day Halk Bankasi lodged a complaint and the inspectors were charged with revealing bank secrets, an offence punishable by imprisonment.

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