PHASE 3 REPORT ON IMPLEMENTING THE OECD ANTI-BRIBERY CONVENTION IN TURKEY October 2014 This Phase 3 Report on Turkey by the OECD Working Group on Bribery evaluates and makes recommendations on Turkey’s implementation of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the 2009 Recommendation of the Council for Further Combating Bribery of Foreign Public Officials in International Business Transactions. It was adopted by the Working Group on 17 October 2014. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. 2 TABLE OF CONTENTS EXECUTIVE SUMMARY ........................................................................................................... 5 A. INTRODUCTION .............................................................................................................. 7 1. The on-site visit .................................................................................................................. 7 2. Summary of the monitoring steps leading to Phase 3 ........................................................ 7 3. Outline of the report ........................................................................................................... 7 4. Economic background ........................................................................................................ 8 5. Turkey’s foreign bribery risks and approach to corruption ................................................ 9 6. Cases involving the bribery of foreign public officials .................................................... 11 a. Completed case ............................................................................................................. 11 b. On-going foreign bribery investigations ....................................................................... 12 c. Terminated or suspended foreign bribery investigations .............................................. 12 d. Allegations that have not resulted in proceedings to date ............................................. 13 e. Oil-for-Food cases ........................................................................................................ 14 B. IMPLEMENTATION AND APPLICATION BY TURKEY OF THE CONVENTION AND THE 2009 RECOMMENDATIONS........................................................................................... 15 1. Foreign bribery offence .................................................................................................... 15 a. To offer or promise a bribe ........................................................................................... 16 b. Definition of foreign public official .............................................................................. 16 c. Advantage for a third party ........................................................................................... 17 d. Qualified and simple bribery ........................................................................................ 17 2. Responsibility of legal persons ......................................................................................... 18 a. Legal entities subject to liability ................................................................................... 18 b. Link between the liability of the natural person and the legal person .......................... 19 c. Requirement for a benefit to the legal person ............................................................... 20 d. Proceedings against legal persons in practice ............................................................... 21 e. Sanctions against legal persons ..................................................................................... 21 f. Related offences of money laundering and false accounting ........................................ 23 3. Sanctions .......................................................................................................................... 24 a. Imprisonment sanctions ................................................................................................ 24 b. Other sanctions ............................................................................................................. 25 4. Confiscation of the bribe and the proceeds of bribery ...................................................... 26 a. General confiscation regime ......................................................................................... 26 b. Confiscation in practice ................................................................................................ 27 5. Investigation and prosecution of the foreign bribery offence ........................................... 27 a. Enforcement agencies, resources and training .............................................................. 27 b. Opening and terminating foreign bribery cases, including issues of proactivity .......... 29 c. Independence and consideration of Article 5 of the Convention .................................. 32 d. Jurisdiction .................................................................................................................... 36 e. Statute of limitations ..................................................................................................... 37 3 6. Money laundering ............................................................................................................. 37 a. The money laundering offence ..................................................................................... 37 b. Money laundering statistics and enforcement ............................................................... 38 c. Detection of foreign bribery through AML measures .................................................. 38 7. Accounting requirements, external audit, and company compliance and ethics programmes ............................................................................................................................. 41 a. Regulatory and standard-setting bodies ........................................................................ 41 b. The false accounting offence ........................................................................................ 41 c. Auditing standards ........................................................................................................ 43 d. Detection and reporting of foreign bribery by external auditors................................... 43 e. Internal controls, ethics and compliance ....................................................................... 45 8. Tax measures for combating bribery ................................................................................ 47 a. The non-tax deductibility of bribes ............................................................................... 47 b. Awareness, prevention and detection by tax authorities ............................................... 47 c. Foreign bribery reporting by tax authorities ................................................................. 48 d. Sharing of tax information internationally .................................................................... 48 9. International cooperation .................................................................................................. 50 a. Mutual Legal Assistance ............................................................................................... 50 b. Extradition .................................................................................................................... 51 10. Public awareness and the reporting of foreign bribery ................................................. 51 a. Prevention, detection, and awareness of foreign bribery .............................................. 52 b. Reporting of foreign bribery ......................................................................................... 54 c. Whistleblower protection .............................................................................................. 55 11. Public advantages ......................................................................................................... 56 a. Public procurement ....................................................................................................... 57 b. Officially supported export credits ............................................................................... 58 c. Official Development Assistance ................................................................................. 59 C. RECOMMENDATIONS AND ISSUES FOR FOLLOW-UP ......................................... 60 1. Recommendations of the Working Group ........................................................................ 61 2. Follow-up by the Working Group .................................................................................... 64 ANNEX 1: PHASE 2 AND 2BIS RECOMMENDATIONS TO TURKEY AND ASSESSMENT OF IMPLEMENTATION BY THE WORKING GROUP ON BRIBERY IN 2010 ........................................................................................................................................ 66 ANNEX 2: LIST OF PARTICIPANTS ...................................................................................... 70 ANNEX 3: LIST OF ABBREVIATIONS, TERMS AND ACRONYMS .................................. 72 ANNEX 4: EXCERPTS FROM RELEVANT LEGISLATION ................................................ 74 4 EXECUTIVE