Turkey’s Ruling-Party Deputy Chair Resigns Amid Allegations Over Fund Crisis

Turkey’s widening fund crisis has reached the ruling AK Party’s leadership, with Deputy Chair Fatma Betul Sayan Kaya stepping down from her party post after opposition allegations about stock trades involving her and her husband.

Kaya, a former family and social policies minister, said late Saturday that she’d asked President Recep Tayyip Erdogan, who is also AK Party chairman, to relieve her of her duties so that the allegations could be investigated without her position becoming part of the dispute. She said in a post on X that she wanted the claims to be clarified “without leaving any room for doubt.”

The move came hours after opposition New Party spokesman Zeynel Emre alleged Kaya bought about 63.4 million liras ($1.3 million) in shares of Ozata Denizcilik Sanayi ve Ticaret AS in April, and sold them in September for about 1.34 billion liras as the shipbuilding company’s stock soared. Emre also alleged that Kaya’s husband invested about 99.7 million liras in the company and later withdrew about 826 million liras.

Emre said the sales were completed before Sept. 16, when Turkey’s fund-related turmoil spilled into the stock market, and questioned whether the timing indicated advance knowledge. He also alleged that proceeds were moved through several accounts, including one outside Turkey. Those claims haven’t been independently confirmed.

Kaya didn’t respond to Bloomberg’s calls and messages seeking comment.

Turkey’s Capital Markets Board, or SPK, said Friday it had filed criminal complaints against 11 people over transactions in Ozata Denizcilik shares, including Tera Investment Holding Chairman Emre Tezmen and other people linked to Tera. The regulator imposed two-year trading bans on the 11 individuals as well as on Tera Yatirim Menkul Degerler and Tera Portfoy Yonetimi AS in relation to Ozata shares. Neither Kaya nor her husband were among those named.

Read more: Tera Firms Held 99% of Fund Before It Drew 100,000 Investors

The political fallout marks a new stage in a market crisis that began with liquidity problems at investment funds holding large positions in relatively illiquid Turkish stocks. Authorities on Sept. 17 ordered the liquidation of 131 funds managed by seven portfolio companies. The SPK says those funds had 455,758 individual investors; the reported assets were valued at about $20 billion.

The resultant forced selling triggered a sharp decline in Borsa Istanbul even as regulators and the central bank took steps to shore up market liquidity. Prosecutors have since started a broader investigation into capital-market transactions, with senior executives at Tera and Pusula Portfoy Yonetimi AS among those detained and arrested.

Read More: Turkish Fund’s Goldman Dreams Collapse in ‘Ponzi-Like Scheme’

The investigation has also widened beyond the market itself. Turkey’s Financial Crimes Investigation Board, or MASAK, has provided prosecutors with information on earlier shareholders in the funds under investigation, while authorities have been examining financial transactions and potential asset movements. Justice Minister Akin Gurlek said Saturday that authorities had frozen the assets of 46 legal entities, 18 funds and 42 individuals after examining fund activity between July 1 and Sept. 16.

Erdogan has characterized the turmoil as confined to a limited part of the capital markets and said it doesn’t pose a risk to Turkey’s financial system or economy, while promising that anyone responsible would be held accountable.

Read more: How Turkey’s High-Flying Funds Came Crashing Down: Explainer