Fatma Betul Sayan Kaya, Vice President of the ruling Justice and Development Party in Turkey, resigned from all her positions, after she and her husband were accused of making huge profits from stock trading before the outbreak of the investment funds crisis that pushed the stock market into a sharp selling wave.
Kaya said, in a post on the “X” platform late on Saturday evening, that she had submitted a request to the party president to relieve her of all the positions and responsibilities she holds, explaining that she saw the necessity of “bearing political responsibility” so that the position she holds does not become a subject of public controversy, and to ensure that the investigation is conducted independently and impartially and without any influence or suspicion of interference.
The resignation from a leadership position in the ruling party comes amid a financial crisis that raised increasing political questions, after investment funds were unable to meet withdrawal requests from about half a million investors, following a sharp wave of selling in the market.
Zeynel Emre, spokesman for the opposition Yeni Party, accused Kaya and her husband, Ilyas Kaya, of investing about 163 million liras ($3.3 million) last April, most of which in the shares of the Ozata Denizcelik shipbuilding company, and then realizing about 2.17 billion liras ($44 million) from its later sale.
Ozata Denizcelik's shares traded at about 220 liras at the beginning of April, before rising to 4,980 liras on September 15, that is, one day before the outbreak of unrest in the investment funds sector. Emre raised questions about the timing of the transactions, while Kaya did not comment on the details of the accusations.
Kaya is responsible for the social policies file in the Justice and Development Party, and was Minister of Family between 2016 and 2018. Her resignation came at a time when investigations related to the funds crisis are continuing, which prompted the authorities to take measures to support financial stability.
In a development related to the investigation, Ozata Denizcelik Company said in a regulatory filing on Friday that its Chairman of the Board of Directors, Ozdemir Atta Sevin, and his deputy, Gokhan Atta Sefen, were imprisoned pending trial, as part of the ongoing investigation into the crisis.
The crisis accelerated after the Turkish Capital Markets Council, in early September, amended the investment rules for funds, so that the fund was no longer allowed to invest all of its assets in one stock, while obligating it to diversify its investments.
The amendment came in the wake of concerns about the concentration of a number of funds’ investments in limited stocks, some of which are small companies or low-liquidity stocks that are difficult to sell in the markets.
The new rules prompted some funds to sell parts of their portfolios to comply with diversification requirements, which raised concerns among investors and prompted a number of them to try to recover their investments.
The crisis worsened after several companies admitted their failure to meet investors' requests to recover their money, which led to a wave of turmoil on the Istanbul Stock Exchange.
The next day, the Turkish Capital Markets Board decided to liquidate the 131 investment funds. Pointing out that the crisis affected more than 455,000 individual investors.
The number of those arrested in connection with the case rose to 51 people, including a former deputy governor of the Turkish Central Bank, according to what was reported by Turkish media.
The crisis raised questions about the regulatory framework for capital markets in Türkiye. Economist Timothy Ash called for a comprehensive investigation to determine what happened and those responsible for it, taking corrective measures, and holding those found responsible accountable.
A spokesman for the Justice and Development Party, Omar Celik, said that the fight against all forms of violations will take place “without leniency,” stressing that any allegations will be subject to investigation, that violations will be revealed, and that those responsible will be held accountable before the law.
The crisis also raised speculation about the possible resignation of Treasury and Finance Minister Mehmet Simsek, but he denied this news and described it as “baseless.”
On the other hand, Turkish President Recep Tayyip Erdogan downplayed the risks that the fund crisis might pose to the economy, saying - during a conversation with Turkish journalists on the sidelines of the United Nations General Assembly meetings in New York this week - that there were no risks to the financial system or the Turkish economy.
He added that the authorities are taking all necessary steps within the framework of the rules of capital markets and the law, stressing that anyone proven responsible will be held accountable before the law.
