US embassy cable - 05ANKARA1040

C O N F I D E N T I A L SECTION 01 OF 02 ANKARA 001040 
 
SIPDIS 
 
USDOE FOR CHUCK WASHINGTON 
USDOC FOR 4212/ITA/MAC/OEURA/CPD/DDEFALCO 
 
E.O. 12958: DECL: 02/22/2025 
TAGS: ENRG, EPET, PGOV, TU 
SUBJECT: TURKEY: ENERGY CORRUPTION INVESTIGATION GOOD AND 
BAD 
 
 
Classified By: (U) DCM Robert Deutsch; Reasons: 1.4 (b,d) 
 
1.  (C) SUMMARY: Reminiscent of the 2001 "White Energy 
Probe", Turkey has launched a new energy corruption 
investigation, casting its net first to 11 senior energy 
officals and business-people in the electricity and natural 
gas sectors, the investigation -- announced by Energy 
Minister Guler -- has caused great unease among other 
Ministers and ruling AKP officials whose activities appear to 
have been, at a minimum, imprudent.  Despite the fears of 
some Embassy contacts that the investigation and wide press 
coverage of possible links will slow down liberalization and 
privatization in the energy sector, tackling corruption 
relentlessly is essential if Turkey is to have any chance of 
joining the EU and if PM Erdogan wants to retain credibility. 
 End Summary. 
 
2.  (SBU) On February 13, Turkish state prosecutors ordered 
the arrest of seven businessmen and senior officials on 
charges of corruption in energy sector tenders.  Among the 
first arrested were the Director, Onder Piyade, and Deputy 
Director of EUAS (the State Electricity Production Company) 
and some private company CEO's, including the brother of an 
AKP Deputy.  Among an additional four officials who were 
detained and released was state pipeline company BOTAS Deputy 
Director Fuat Celepci.  According to lively press reporting, 
the scope of the investigation includes irregularities in 
energy tenders and auctions (primarily hydroelectric 
facilities), but also includes alleged abuses in construction 
tenders for the Turkey-Greece natural gas pipe-line. 
Ironically, EUAS Director Piyade was named "Bureaucrat of the 
Year" by the Energy Minister last September, even though 
police had started to probe allegations for alleged graft 
against him in July. 
 
3.  (C) Some press accounts have already labeled this graft 
probe as "White Energy Probe II", referring to what is 
described as Turkey's single largest corruption and bribery 
investigation, undertaken in 2001 primarily against energy 
officials from the formerly dominant ANAP party in government 
at that time.  While these and related cases continue to this 
day against former PM Mesut Yilmaz, former State Minister 
Gunes Taner, and former Energy Minister Cumhur Ersumer (all 
accused of or linked to massive corruption in the Blue Stream 
project for provision of Russian natural gas under the Black 
Sea), there have so far been only a few convictions at a 
lower level.  "White Energy" petered out mostly because 
former PM Yilmaz and allies in the military, including former 
CHOD Kivrikoglu, succeeded in spiking the investigation, in 
which Jandarma intelligence had taken the lead.  One legacy 
of the White Energy probe is a perception of continuous 
investigation that has created an increased bureaucratic 
hesitance to reach decisions and sign documents - for fear 
that one might be later accused of doing something "not in 
the interests of the state" (however defined or calculated). 
Like the previous probe, the newest energy corruption 
investigation is gaining increasing press attention and may 
spiral in its reach. 
 
4.  (SBU) Many press reports have noted that AKP affiliated 
or designated officials have been targeted in the probe. 
Press reports have also noted that Piyade was appointed by 
the new AKP government, even after his appointment had been 
turned back by President Sezer (who has rejected appointments 
of many officials perceived as overly "Islamist").  One 
columnist predicted that corrupt links between some AKP 
deputies and targeted businesses could trigger a 
(long-predicted) cabinet reshuffle. 
 
5.  (C) PM Erdogan and other officials have stated that the 
investigation should be pursued vigorously wherever it might 
lead as part of its general campaign against corruption. 
However, the way in which the cases were announced reflects 
political rivalries and various clan and religious lodge 
relations inside and close to the AKP.  We understand from 
police and other contacts that the Turkish National Police 
had been on the verge of announcing the arrest when Energy 
Minster Guler, also long aware of and supporting the 
investigation, preempted them with a press announcement as 
the arrests were carried out. 
 
6.  (C) The energy graft probe may trigger investigations in 
other sectors.  A number of cases are ongoing concerning 
corruption in the military.  We understand another 
investigation into smuggling with high level GOT links is 
underway, as is an investigation of drug procurements by the 
Social Security System which has led to the arrest of Roche's 
Turkey General Manager.  Finally, President Sezer was 
reported to have proposed to PM Erdogan the creation of a new 
anti-corruption ministry. 
 
7.  (C) COMMENT: The AKP Government took power with promises 
of doing something about the systemic and formidable problem 
of corruption in Turkey.  Whether and to what extent this 
investigation represents a start on meeting this so far 
unfulfilled promise remains to be seen.  (The impact of this 
probe on the energy sector is also unknown.)  Past corruption 
investigations have been ineffective because they were 
immediately politicized.  Given the rumored extent of 
continuing corruption, it seems doubtful that the Erdogan 
government will pursue corruption effectively. 
EDELMAN