Kiwi consul nabbed on fraud charges

By David Barber

Friday 20th October 2000

CLAMPDOWN: Murat Demirel is accused of embezzling bank funds

New Zealand's honorary consul in Istanbul for the past six years has been arrested on multimillion-dollar embezzlement charges in a Turkish government clampdown on corruption with top-level political overtones.

Murat Demirel, a prominent businessman and nephew of the former president, is accused of embezzling funds from a bank he owned which was taken over by the government last December along with seven other ailing banks, all reported to have racked up losses totalling $US4.5 billion (about $11.2 billion).

He was arrested on October 2 with his long-time partner - whom he married in jail a week later - and six associates.

His second three-year term as New Zealand's honorary representative in Istanbul ended four days after his arrest and the Ministry of Foreign Affairs & Trade has not reappointed him pending the outcome of the case.

Mfat officials would make no comment on Mr Demirel's arrest but privately said he did a good job for New Zealand, running an efficient consulate and providing valuable introductions to business leaders. New Zealand diplomats in Turkey have been denied permission to see him in prison.

Prime Minister Helen Clark met Mr Demirel when she went to Istanbul in April and he came to New Zealand with a business delegation in 1997.

He was paid only the basic $5000 honorarium plus expenses awarded to all New Zealand's 40 honorary consuls around the world and the post gave him no diplomatic privileges.

His initial appointment in Turkey's main trade and business centre of 11 million people in October 1994 was hailed as something of a coup for New Zealand, particularly because of his family connections with President Suleyman Demirel, a veteran politician who had been prime minister several times.

But the seven-year term in office of President demirel, now aged 76, ended this year and there is speculation in Turkey that the arrest of his nephew was politically motivated.

Interior Minister Sadettin Tantan told a press conference on October 4 after Mr Demirel's arrest: "No one will be exempt from prosecution in our fight against corruption and the sources of corruption.

"All those people or companies who swindle our people and wreak havoc with their honour will be met with the fierce determination of government forces."

The turkish press has featured claims that Mr Demirel, who was alleged to have siphoned funds from his Egebank through front companies and offshore accounts, was tipped off last December about the imminent government takeover.

Reports said his friends then entered the bank and were filmed by security cameras carrying out documents and money stashed in suitcases.

Former president Demirel was reported to have angrily denied suggestions he warned his nephew of the government's intention to take control of Egebank.

The World Bank has promised Turkey aid money if it cleans up its financial system.

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