US embassy cable - 05ANKARA4622

C O N F I D E N T I A L SECTION 01 OF 02 ANKARA 004622 
 
SIPDIS 
 
TREASURY FOR OFTI - U/S LEVEY, A SZUBIN AND R LEBENSON 
JUSTICE FOR SUZANNE HAYDEN 
 
E.O. 12958: DECL: 08/05/2009 
TAGS: EFIN, KTFN, PTER, TU 
SUBJECT: TERRORIST FINANCING: CHARGE MEETS FINANCE MINISTER 
 
Classified By: Charge d'Affaires Nancy McEldowney for Reasons 1.4 (b) a 
nd (d). 
 
1.(C) Summary: In a meeting called by Finance Minister 
Unakitan, the Charge urged the Minister to follow through on 
the U.S. proposal for a bilateral interagency working group 
on terrorist finance.  The Finance Minister agreed, 
immediately called the Justice Minister to get his support, 
and said they would discuss it in the Council of Ministers. 
The Finance Minister said the GOT would draft a letter laying 
out the steps it is taking to strengthen its terrorism 
finance regime.  One of the Vice Presidents of Turkey's FIU 
separately reviewed these steps with Econoff.  End Summary. 
 
Finance Minister Calls Meeting on Levey Letter 
--------------------------------------------- - 
 
2. (SBU) Finance Minister Unakitan met with Charge and 
Econoff on August 4.  Also present on the GOT side were the 
Minister's advisor Naci Agbali and Ender Tosun, one of two 
Vice-Presidents at MASAK, the anti-money laundering agency 
which is Turkey's Financial Intelligence Unit (FIU). Unakitan 
intended for Tosun to brief on the specific steps the GOT was 
taking but there was no time (see below).  Unakitan said he 
was re-evaluating all the elements discussed in the letter 
from U/S Levey and would send us a reply.  He stressed that 
the fight against terrorism was "all humanity's fight" and 
that cooperation was essential. 
 
Unakitan against the "Deep State" Finance Inspectors 
--------------------------------------------- ------- 
 
3. (C) In his meeting with U/S Levey, Unakitan had asked for 
a list of past cases in which cooperation had not worked 
well.  Though we had wanted to avoid getting into a 
backward-looking exercise that could be counterproductive, 
the USG had attached a description of the rather 
dysfunctional cooperation on the Marwan Haddad case.  In the 
meeting, Unakitan reacted with some agitation to our 
attachment, saying "this is very delicate for me."  He 
criticized Embassy officers for going directly to the Finance 
Inspection Board without going through the Minister.  If we 
don't go through the Minister, he asked, how can he respond 
appropriately as a Ministry? 
 
4. (C) Background Note: The Minister's reaction undoubtedly 
stems from the fact that some of the Haddad accounts were at 
Al-Baraka Bank, on whose board Unakitan served.  There have 
been longstanding accusations in the press that Unakitan used 
his position as a director of Al-Baraka to help his son's 
business obtain fictive export rebates on VAT taxes.  Indeed, 
IMF officials told us that one provision in last spring's tax 
administration reform law seemed narrowly targeted to 
exonerate people charged with the crime Unakitan is accused 
of. 
 
5. (C) Econoffs went to the Finance Inspection Board on this 
case because the inspectors were investigating the Haddad 
case and we were trying to get them to release some of the 
information to U.S. law enforcement.  Finance Inspectors told 
us that Unakitan personally was blocking the release of the 
information, although Unakitan himself later provided some of 
the information by going around the bureaucracy.  Comment: 
This was a case of a leading AK Party Minister clashing with 
state bureaucracy, amid accusations of the Minister's 
corruption. The head the Finance Inspectors even referred to 
his organization as "the Deep State."  The inspectors are an 
elite organization within the state bureaucracy, modelled on 
the French Inspection des Finances, with close connections to 
the presidency, the judiciary and the military.  The AK Party 
government has cleverly used a series of IFI and EU reforms 
to reduce the powers of the Finance Inspectors.  All of which 
explains Unakitan's sensitivity about our dealing directly 
with the Finance Inspectors. End Comment and Background Note. 
 
Charge Presses Working-level Cooperation 
---------------------------------------- 
 
6. (SBU)The Charge pushed back on this point, however, saying 
we should not have to go back through the Minister to 
cooperate: cooperation should be automatic.  Saying we want 
to work closely with the GOT to shut down terrorist financing 
everywhere, she emphasized the need to create a structure in 
which working-level officials are able to communicate and 
cooperate easily.  Unakitan seemed to accept this, and added 
that "we need to learn from our mistakes. The cost is very 
high."  In terms of which agency the USG could most 
appropriately deal with, however, Unakitan emphasized that 
MASAK has the lead on this issue. 
 
Working Group 
------------- 
7. (SBU) The Charge raised the idea of a bilateral working 
group or committee that had been floated by Justice Minister 
Cicek during U/S Levey's visit and suggested in U/S Levey's 
followup letter.  Unakitan called Cicek on the spot, catching 
the Justice Minister at a traditional Turkish wrestling 
match.  The two ministers agreed to discuss the idea in 
Council of Ministers.  The Charge urged that all relevant 
Turkish agencies participate.  Unakitan repeated that MASAK 
should coordinate.  If the Ministers agree to the concept, 
all present thought it best for the first meeting to take 
place in September given the many absences during August. 
The Charge suggested regular meetings to follow the issues, 
starting with the items in U/S Levey's letter. 
Closer cooperation Against PKK Financing: 
---------------------------------------- 
 
8. (C) The Charge also raised the possibility of closer 
cooperation between the U.S. and Turkey in shutting down PKK 
financing in Europe.  She stressed the importance of 
developing good evidence to get the Europeans to cooperate 
effectively. 
 
MASAK Official on GOT Actions: 
------------------------------ 
 
9. (C) In a follow-up meeting with Econoff, MASAK V.P. Ender 
Tosun briefed on what the GOT was doing on each of the points 
raised in U/S Levey's letter.  As GOT officials said to 
Levey, many of the points raised will be resolved once the 
MASAK law is passed and a second set of legal changes 
proposed by an interagency working group to strengthen 
Turkey's anti-terror finance laws.  Both Unakitan and Tosun 
asserted the MASAK law will be passed quickly once the 
parliament comes back into session in September or October. 
The MASAK law will explicitly criminalize the financing of 
terrorism and provide safe harbor for filers of suspicious 
transaction reports.  The other set of legal changes will 
broaden the definition of terrorism to a more international 
definition.  This second batch of changes is currently under 
consideration at the Prime Ministry, according to both Tosun 
and MFA official Togan Oral.  After the Prime Ministry 
approves it it can go to Council of Ministers, but neither 
Tosun nor Oral predicted when that would happen.  Tosun also 
said that the new Turkish penal code which recently came into 
effect provides a stronger legal basis for freezing assets, 
giving judges explicit legal authority to freeze.  He said 
this should make it harder to challenge freezes as 
unconstitutional. 
 
10. (C) Likely as a result of Levey's visit and persistent 
Embassy prodding, Tosun described a new effort by MASAK to 
reach out to other agencies and cooperate better.  He said he 
had visited the police, Foreign Ministry and other agencies, 
who were quite receptive.  He confirmed our understanding 
that the police lack expertise in "following the money," 
saying that they might seize financial records and have no 
idea what to do with them.  He said MASAK would like to 
include police in training programs. 
 
11. (C) Tosun also said that with the new banking law, any 
institution transferring money has to have a license from the 
Bank Supervisory and Regulatory Agency (BRSA).  These 
organizations would also be subject to "know-your-customer" 
rules.  He specified that informal money transfer networks 
(Hawalas) are illegal in Turkey, though he admitted they 
exist.  Tosun said that MASAK's information technology 
project would facilitate better interagency 
information-sharing, as other agencies will have access to 
the information. 
 
12. (C) Post will continue to pursue the agenda in U/S 
Levey's letter and the idea of a bilateral working group. 
MCELDOWNEY