{"text":[[{"start":8.88,"text":"They call it the Fonzi: a multibillion-dollar financial scandal that has torched the savings of half a million Turks, enraged President Recep Tayyip Erdoğan and shaken his government to the core."}],[{"start":20.2,"text":"“Fonzie” or “The Fonz” was also the leather-jacketed hero of the 1970s US sitcom Happy Days. But there is nothing happy about the popping of Turkey’s Fonzi bubble."}],[{"start":30.32,"text":"Instead, it is a $20bn investment fund crisis, its name a mixture of the Turkish word for fund and a reference to Ponzi schemes."}],[{"start":38.96,"text":"“The scale of what is going on is not fully appreciated internationally; this is the leading topic in national conversation,” says Atilla Yesilada of GlobalSource Partners, an Istanbul-based consultancy."}],[{"start":51.64,"text":"The Fonzi scandal has shaken confidence in Turkey’s already struggling $1.8tn economy, even as Ankara is viewed by Nato allies as an increasingly important bulwark against Middle East instability and Russian revanchism. Over 455,000 retail investors, who were sucked into funds with visions of 1,000 per cent returns, risk seeing their savings lost."}],[{"start":null,"text":"

"}],[{"start":74.84,"text":"Most important of all, and unlike other scandals such as Bernard Madoff’s swindle, Turkey’s Fonzi crisis is alleged to reach into the highest echelons of government."}],[{"start":83.94,"text":"To critics, including some within the administration, it is symptomatic of a late-stage cronyism that has hollowed out Turkish institutions after 24 years of increasingly centralised rule — just as questions about Erdoğan’s political succession have come to the fore."}],[{"start":99.36,"text":"A foretaste of the scandal came months before it exploded, when an opposition lawmaker raised a pointed question in Turkey’s parliament."}],[{"start":107.28,"text":"Turkey’s capital markets have become “a quagmire”, Ayyüce Türkeş Taş declared, adding that investors were being defrauded through “pooling techniques, self-trading and manipulation”. She asked why no action was being taken; even Turkey’s finance minister had issued a similar warning."}],[{"start":123.24,"text":"Her counterparts in the ruling Justice and Development Party, known in Turkish as the AKP, brushed the question aside. Market disruptions are being “resolutely combated”, one said. The “financial architecture” of Erdoğan’s vision of a “Turkish century” is “solid”, he added, to cheers from government benches. An investigation proposed by the opposition was swiftly voted down."}],[{"start":null,"text":""}],[{"start":146.72,"text":"That exchange, recorded in parliamentary transcripts, took place in December."}],[{"start":151.58,"text":"Almost a year later, the roll call of establishment figures caught up in the scandal grows virtually every day."}],[{"start":158.24,"text":"Among those arrested and remanded in custody are the former head of the Istanbul stock exchange; the former presidential adviser credited with devising Erdoğan’s “Turkish century” election slogan; a former ambassador to the OECD; a former central bank deputy governor; and the former chief executive and deputy chief executive of Türkiye Sigorta, Turkey’s largest non-life insurer, controlled by a sovereign wealth fund chaired by Erdoğan."}],[{"start":184.9,"text":"The investigations encompass allegations ranging from bribery and market manipulation to abuse of office and involvement in a criminal organisation. Some suspects have denied wrongdoing, while others have made no public response to the allegations against them."}],[{"start":199.92,"text":"Other senior officials have lost their positions."}],[{"start":203,"text":"Two successive chiefs of Turkey’s capital markets regulator, the SPK, have lost their jobs, one citing ill health, and a deputy finance minister has retired following the arrest of his son-in-law. Closest to the top of the political pile is the AKP’s deputy chair, Fatma Betül Sayan Kaya, who has resigned."}],[{"start":null,"text":""}],[{"start":222.6,"text":"A furious Erdoğan has said the crisis is being handled “with a surgeon’s precision”. But party cadres and allies have been shaken to the core. One usually supportive Islamist group fulminated in a two-page declaration that the Fonzi crisis was “not an accident” but the result of “turn-a-blind-eye complicity and favouritism”. It has also been accompanied by a crackdown on independent media."}],[{"start":245.56,"text":"The funds crisis is “not a malfunction of the system. Nor, obviously, is it a case of a few bad apples. This is how the system actually works,” says Wolfango Piccoli, a longtime Turkey watcher and head of geopolitical risk at Consello, an advisory group. “It’s a story of institutional degradation, of regulatory bodies that have slowly been hollowed out.”"}],[{"start":267.52,"text":"A 4,000% return"}],[{"start":269.96,"text":"Alican Mordalga is one of the hundreds of thousands of Turks who now rue putting their life savings, in his case some TL6mn ($120,000), into one of the Fonzi funds. Like many others, he had seen the glossy promotional materials put about by personalities such as Emre Tezmen, the 53-year-old founder of Tera Group whose brokerage and investment funds lie at the centre of the scandal."}],[{"start":294.92,"text":"“The funds were regulated . . . they weren’t some underground operations. So, I trusted them on that basis, just as people do in other countries,” Mordalga says. “I don’t think anyone imagined something like this could happen.”"}],[{"start":307.56,"text":"Tezmen, son of a former politician who chaired Turkish Airlines in the 1990s, founded Tera in 2005 and built it into a sprawling financial group."}],[{"start":317.08,"text":"The rewards that his brokerage dangled to prospective investors were extraordinary. Corporate presentations boasted that its main fund, TLY, returned 4,233 per cent in 2025 against just 13 per cent for the Istanbul stock market."}],[{"start":332.12,"text":"In a February 2025 profile in the Turkish edition of Gentleman magazine, a luxury lifestyle magazine that covers business personalities, the billionaire had forecast a year of “opportunities” when “seeds that we planted earlier will bear fruit”."}],[{"start":346.52,"text":"He also revealed, somewhat unimaginatively, that he was first inspired to work in finance after seeing the 1987 movie Wall Street, in which the main character proclaims the infamous line: “Greed . . . is good.”"}],[{"start":null,"text":""}],[{"start":359.6,"text":"Instead, however, the Tera operations that investigators are now examining bear an uncomfortable resemblance to the “pump and dump” schemes of financial history, such as Wall Street’s notorious “pool operators” of the roaring 1920s."}],[{"start":373.66,"text":"In essence, Fonzi funds built up concentrated positions in related companies, bidding up their share prices and flattering the funds’ own net asset values. Spectacular returns attracted new investors, providing fresh money for the funds to buy the same or related stocks. Sometimes there were also corporate bond issues, analysts say, used to buy more shares or cash out investors."}],[{"start":395.94,"text":"The fortunes of Özata Denizcilik, a shipbuilding company, illustrate the mechanics."}],[{"start":400.76,"text":"When it floated in 2024, with a market capitalisation of roughly $200mn, less than a fifth of its shares were publicly traded. In April, Tera funds began accumulating Özata stock at around TL281. By late August, the funds had bought almost 96 per cent of Özata’s available shares, squeezing its stock price ever higher until it reached a peak of almost TL5,000 in mid-September — a 1,600 per cent return in five months."}],[{"start":429.36,"text":"The SPK, Turkey’s capital markets regulator, has since filed criminal complaints against 11 people, including Tezmen, over suspected manipulation of Özata shares. Tezmen, who has been remanded in custody, denies wrongdoing."}],[{"start":444,"text":"That segments of the Turkish market had seemingly gone crazy was no secret. Turkey’s Financial Stability Committee, which includes finance minister Mehmet Şimşek and the central bank chief, discussed the problem last December. Even then, according to a statement later issued by the SPK, the committee was concerned that “certain portfolio management companies . . . were causing price movements . . . that could not be explained by economic reality”."}],[{"start":468.36,"text":"Some warnings were more explicit still. Ramazan Başak, a former deputy head of Turkey’s financial crimes agency Masak, says he repeatedly alerted the authorities to suspicious transactions but was ignored. Başak was detained in April on suspicion of spreading “misleading information” after he questioned some of Tera’s astronomical returns. He was subsequently released and denies wrongdoing."}],[{"start":491.24,"text":"International investors sounded the alarm too. In June, index provider MSCI warned that “co-ordinated trading behaviour” might be distorting stock market prices. Savvy Turkish investors watched it happening in plain sight."}],[{"start":504,"text":"“What surprises me is that these irregular transactions weren’t hidden away in regulatory dashboards. Much of it was publicly available,” says Cenk Gültekin, co-founder of crypto-analytics platform Coinradar. “The warning signs were there . . . but did not trigger earlier intervention.”"}],[{"start":521.36,"text":"The bubble burst in late August, after a change in free-float regulations governing shares threw the cycle of wealth creation into sudden reverse. On September 15, investment manager Pusula Portföy said some of its funds could not meet investor redemption requests. The alarm quickly spread. Other investors rushed to sell, there was a full-blown “funds run” and the market tanked."}],[{"start":544.48,"text":"“No Ponzi dies of natural causes. Either the regulators pull the trigger or investors do. In our case, it was the investors,” says Kerim Rota, an economist who has closely followed the Fonzi crisis."}],[{"start":null,"text":""}],[{"start":556.86,"text":"As an indication of how far some share prices have fallen, Özata, the shipbuilder, now trades at TL170 — a 98 per cent fall from its peak."}],[{"start":566.34,"text":"In an extraordinarily well-timed bet, Kaya, the deputy AKP chair who has since resigned, and her husband, sold their 400,000 Özata shares before the crash. Kaya says she has since voluntarily returned more than TL2bn — about $40mn — in gains from share trading and denies receiving inside information or committing any wrongdoing."}],[{"start":588.22,"text":"Three Özata directors, including its chair, have been remanded in custody as part of the broader Fonzi investigation into market manipulation. The company has said such moves do not constitute guilt, that it is ready to challenge the detentions in the courts and that its own operations remain unaffected."}],[{"start":604.38,"text":"How high did it go?"}],[{"start":605.9,"text":"Turkish authorities now have to confront how to best clean up the mess."}],[{"start":609.56,"text":"On September 17, the day after the market rout, the Financial Stability Committee responded with a co-ordinated series of emergency measures that included a freeze on trading, the liquidation of 131 funds with $20bn of assets between them, and an increase in lira liquidity by the central bank to limit forced selling."}],[{"start":628.68,"text":"“We have placed the problematic area under quarantine,” said finance minister Şimşek, adding that it represented just 10 per cent of Turkey’s investment fund sector and was not a systemic threat. Crucially, there had been no rush into dollars by worried investors, he said. The exchange rate was stable."}],[{"start":646.88,"text":"With the financial situation calmed, Erdoğan first spoke publicly about events a week later. At the UN General Assembly in New York, he said that Turkey’s economy was “robust” and whoever “engaged in manipulative schemes” would be held to account."}],[{"start":662.64,"text":"At home, however, the affair has continued to unfold, with two central questions so far unanswered. Why did the authorities, who knew about the apparent share price manipulation, allow the bubble to inflate for so long? And if there was collusion, how high up the system did it go?"}],[{"start":679.44,"text":"Many Turks, including government officials, are furious. The AKP’s deputy head of economic affairs, whose companies lost money in Fonzi, has decried “gross negligence” and abuse of authority. Pro-government newspaper columnists have joined the lament. One warned party elites to step outside “the comfort of their offices” and reconnect with voters tired of “flowery language”."}],[{"start":null,"text":""}],[{"start":702.16,"text":"As consumer confidence collapsed, dropping 8 per cent in October alone, a private poll reportedly delivered to Erdoğan suggested that the AKP’s popularity had dropped by 6 per cent in just one month, according to former AKP lawmaker Şamil Tayyar."}],[{"start":718.36,"text":"Such polling has extra significance as the next presidential election must take place by 2028. It is widely assumed that Erdoğan, 72, will find a way to run again. But a constitutional bar on a third presidential term has led to speculation about who might eventually govern Turkey instead. Aydın Ünal, an Erdoğan loyalist and former presidential speechwriter, has warned darkly that the scandal may be a “trap” against Erdoğan, set by rival factions “from within”."}],[{"start":749.18,"text":"Independent journalists have meanwhile faced growing pressure. On October 14, police raided Halk TV, one of Turkey’s most-watched news channels, citing a separate corruption investigation. A state-appointed trustee was subsequently installed to run the channel, which had reported extensively on the Fonzi scandal."}],[{"start":768,"text":"The moves followed the blocking two weeks earlier of T24, a respected independent news website, on unrelated grounds. Over 2,000 Turkish social media accounts have also been blocked in just two months, according to IFOD, a digital rights campaigner watchdog, almost half the total number made unavailable in Turkey in the decade between 2015 and 2025."}],[{"start":790.8,"text":"“Only dictators raid television stations at dawn and appoint trustees,” opposition leader Özgür Özel, who has called the Fonzi scandal the “theft of the century”, said after the Halk TV intervention. “While the public demands accountability for the fund scandal . . . they do this.”"}],[{"start":791.3,"text":"The fallout"}],[{"start":805.66,"text":"Fraud and speculative bubbles are as old as finance itself. The South Sea Bubble of 1720, among the most notorious Ponzi schemes in history, burst only months after Britain’s parliament passed the so-called Bubble Act, supposedly an initiative to rein in speculative excess."}],[{"start":824.2,"text":"“The original meaning of the word bubble is fraud,” says Edward Chancellor, author of Devil Take the Hindmost, a history of financial speculation. “Furthermore, one of the common patterns of great bubbles is that they take place with a degree of support from the governing class. When they pop, there is always political blowback and retribution.”"}],[{"start":843.32,"text":"That appears to be true of Turkey too. Erdoğan has sworn that heads will roll. “Those who obtained illicit and exorbitant gains” will be made to answer before the courts, he glowered at an AKP meeting on October 21. “We do not protect those who wrong our people.”"}],[{"start":858.92,"text":"True to his word, more than 400 people now face judicial proceedings, and there have been over 100 arrests so far. A state audit of what happened is due to be delivered to Erdoğan around the end of the year. Ominously, Justice Minister Akın Gürlek warned this week of a “comprehensive criminal organisation” reaching “the highest levels of [Turkey’s] financial bureaucracy”."}],[{"start":null,"text":""}],[{"start":879.72,"text":"The government has meanwhile arranged payments of up to TL1mn to each aggrieved investor per fund and established a “repentance account” into which those who made extraordinary gains can voluntarily return their profits. Critics say that system is untransparent and could allow both culprits and the government to sweep the issue under the carpet."}],[{"start":900,"text":"“It is the political playbook that the AKP has always used in the past. Move fast, throw some people under the bus, set up an investigation, and then proclaim that the rule of law works,” says Piccoli. “I see no reason why what has worked well in the past won’t work well again.”"}],[{"start":916.94,"text":"The economic fallout of the scandal may be harder to brush aside. Turkey’s economy, struggling with inflation around 30 per cent and punishing borrowing costs of over 40 per cent, needs capital — just when higher global interest rates risk making capital scarcer."}],[{"start":932.44,"text":"But over the past two months the stock market has fallen by around a third, shedding some $100bn of value. Turkey’s fledgling corporate bond markets have come under strain, financial analysts say."}],[{"start":944.52,"text":"Net foreign reserves have dropped by over $30bn since the crisis began to $38bn, estimates Bürümcekçi Research, an Istanbul-based consultancy. And with Turkey ranking 117th out 143 countries in the World Justice Project, rule of law issues continue to deter investment, business leaders say."}],[{"start":964.12,"text":"“It’s not that we’re doing badly, but we’re definitely not doing well,” said one frustrated business leader at a recent business convention in Elazığ, an AKP stronghold in eastern Turkey."}],[{"start":974.88,"text":"The crisis may yet have a silver lining. A thorough regulatory clean-up could restore confidence and revive oft-touted plans to make Istanbul an international financial centre. As Şimşek has philosophically observed: “One misfortune is better than a thousand pieces of advice.”"}],[{"start":989.6,"text":"Still, that is cold comfort for the almost half a million Turks and their families directly affected by the Fonzi scandal. “I don’t know if I can ever believe in the Turkish stock market again,” says Mordalga, whose disenchantment speaks to the crisis’s biggest casualty: trust."}],[{"start":1004.68,"text":"That very issue was raised 10 months ago in parliament by the opposition lawmaker, who had asked a second pointed question. “If the authorities had this information, why did they not act in time?” Türkeş Taş inquired. “Isn’t that complicity — covering up a crime?”"}],[{"start":1019.58,"text":"Additional reporting by Serra Yedikardes"}],[{"start":1021.92,"text":"Data visualisation by Ray Douglas"}],[{"start":1029.28,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1794050387_3137.mp3"}