Turkey’s ex-minister resigns as investment fund crisis grows

Turkey's former Minister of Family Affairs, Fatma Betul Sayan Kaya, submitted her resignation on Saturday in the wake of a growing investment fund crisis. The announcement came after days of speculation surrounding her alleged knowledge of the scandal, which broke earlier in the month and raised concerns over liquidity in the sector.

Regulators swiftly acted to address the issue, placing seven companies managing 131 investment funds with assets valued at approximately US$17 billion into liquidation. Kaya wrote that she submitted a request to her party leader to be relieved of all positions and responsibilities she currently held, stating that she believed it was necessary to take political responsibility to ensure the office she held did not become the subject of public debate and that an impartial investigation could take place.

The opposition Yeni Parti questioned whether Kaya had made a substantial stock market investment of 63 million lira (US$1.3 million) that reportedly generated around 1.3 billion lira in proceeds. Kaya and her husband allegedly offloaded shares before news of the scandal broke. The episode has raised concerns about the extent of political connections among investors in these funds.

Economist Timothy Ash highlighted the need for a comprehensive investigation to identify the responsible parties and to enact reforms. Turkish officials promised a thorough investigation and promised that those who committed wrongdoing would be held accountable. However, the crisis has sparked speculation about whether Finance Minister Mehmet Simsek might resign, though he dismissed these rumors as "baseless."

Despite the concerns, President Erdogan downplayed the risks posed by the fund crisis to the Turkish economy, asserting that all necessary steps were being taken to uphold capital market regulations and the law.