Leaked documents known as the Pandora Papers have lifted the lid on how companies linked to the Justice and Development Party (AKP) government use offshore tax havens to channel millions of dollars abroad.
The near 12 million documents released by the International Consortium of Investigative Journalists (ICIJ) on Sunday include details of tax avoidance schemes involving two of Turkey’s largest conglomerates, Deutsche Welle reported.
They include Çalık Holding, one of the fastest-growing companies under AKP rule, with investments in sectors ranging from construction and textiles to finance and media.
The Pandora Papers show Çalık Holding operates at least four offshore companies in the British Virgin Islands, with combined assets of tens of millions of dollars, according to DW. The companies, linked to senior Çalık Holding executives, appear to be used for commercial transactions while avoiding tax in Turkey.
Çalık Holdings is headed by Ahmet Çalık, ranked as Turkey’s fifth-richest person by Forbes magazine with a fortune of $1.5 billion. However, it remains unclear how much tax the well-connected businessman has paid in recent years.
The conglomerate has subsidiaries in 20 different countries around the world, but those based in the British Virgin Islands are not among those mentioned in its annual reports.
It was similarly implicated in the 2017 Paradise Papers leak, which showed Çalık Holding used offshore accounts in Malta when its CEO was Berat Albayrak, son-in-law of Turkish President Recep Tayyip Erdoğan.
The Paradise Papers also named the family of then Turkish prime minister Binali Yıldırım as using shell companies in the tax haven to obscure the profits of their shipping empire.
Meanwhile, the newly released tranche of Pandora Papers show another of Turkey’s largest companies, Cengiz Holding, currently operates a network of proxies in the British Virgin Islands to avoid taxes while hiding the identity of executives, DW said.
Much like Çalık Holding, the company is invested in a wide variety of sectors. It recently made headlines for clashing with local residents of İkizdere village in the Black Sea region, where Cengiz Holding is seeking to construct a stone quarry despite the significant environmental cost.
Under the AKP, the conglomerate has risen to become one of the largest beneficiaries of state tenders in the world, DW said, citing a World Bank report. The company has received at least $42.1 billion in government contracts since 2002, including a substantial role at Istanbul’s new mage airport, according to the German broadcaster.
Despite receiving huge amounts of public money, Cengiz Holding and its executives have sought to avoid paying taxes in Turkey through shell companies. Examples found by DW include the 2011 purchase of a £3,750,000 house in London through a British Virgin Island-based company named Trident Trust.
Asked by DW to respond to the allegations, company chairman Mehmet Cengiz said using an international entity simplified the sales process when buying foreign properties.
Using offshore companies in the British Virgin Islands does not constitute a crime in Turkey.
Ahval