This article examines the crime of fraud under Turkish law—a prevalent corporate offense that frequently triggers internal investigations and may result in criminal liability. Building on the first installment of our series, it outlines key legal considerations and potential risks for companies and executives.
Business crimes refer to offenses committed by individuals operating in business or government settings, in violation of their duties to employers or clients. As discussed in the first article of our "From Internal Investigation to Prosecution in Türkiye" series1, such crimes frequently trigger internal investigations and may ultimately lead to criminal proceedings and sanctions under Turkish law. This second instalment focuses on the crime of fraud, as regulated under the Turkish Penal Code ("TPC") and related secondary legislation.
What Is Fraud?
Fraud is defined under Article 157 of the Turkish Penal Codeas "deceiving a person through fraudulent behaviour and obtaining a benefit for oneself or another to the detriment of the deceived party or another individual." The object of the crime can be any asset-related value, including movable or immovable property, or receivables.
According to the 2024 Occupational Fraud Report2 by the Association of Certified Fraud Examiners (ACFE), fraud generally falls into three categories:
- Corruption
- Misappropriation of assets
- Financial statement fraud
Fraud may arise internally through employee misconduct—such as conflicts of interest, bribery, or illegal donations—or externally through manipulation of revenues, expenditures, or other operational practices. It can affect various departments including distribution, accounting, or even HR.3
To prevent and detect such misconduct, corporate leadership must ensure that financial reporting and compliance teams are adequately trained, and cultivate a corporate culture where employees, suppliers, and stakeholders feel empowered to report unethical behaviour without fear of retaliation.4
Importantly, fraud may be committed by any individual and does not necessarily require the benefit to be unjust5—what matters is the fraudulent means used to obtain it.
Proactive Compliance Measures
Leadership plays a key role in cultivating a corporate environment that resists fraud. Since undetected fraud can result in prolonged and increased losses, early detection is critical.
One of the most effective tools is a whistleblowing mechanism, which allows employees and other stakeholders to report suspicious conduct. According to the ACFE Report, whistleblowing remains the most common and effective fraud detection method—three times more effective than other mechanisms. Although most tips come from internal employees, external sources such as customers, suppliers, and competitors also contribute significantly.6
Regular internal audits and proactive compliance checks can help identify fraudulent activity before it escalates. Information gathered during internal investigations may later support criminal proceedings and, under Article 25 of the Turkish Labor Law No. 4857, could also justify termination of employment for just cause.
Elements of the Crime of Fraud
For an act to constitute fraud under Turkish law, the following elements must be present:
- An intent to deceive,
- Knowing and willing engagement in fraudulent behaviour,
- An aim to obtain benefit, and
- Damage to the victim's property as a result of the act.
Qualified Forms of Fraud
Article 158 of the TPC sets out aggravated (qualified) forms of fraud, which result in enhanced penalties. These are listed in a limited manner in accordance with the scope of the Article and include instances where fraud is committed:
- Using the name or resources of public institutions and organizations, public professional bodies, political parties, foundations, or associations,
- Against a public institution and organization,
· By using information systems, banking, or credit institutions as a tool,
- By merchants, company representatives, executives, or cooperative managers during commercial activities,
- By self-employed professionals, misusing trust placed in them,
- To unjustly obtain credit or loans.
Fraud committed during commercial or professional activity, particularly by company executives, board members, or those acting on behalf of a company, may constitute qualified fraud under Article 158 and incur harsher penalties.
Additionally, fraud involving deceit about influence over public officials to secure specific outcomes is also penalized under this article.
Turkish Court of Cassation Case Examples
Several judgments by the Court of Cassation illustrate how fraud is applied in practice:
- Misuse of trade secrets to gain repeated unjust benefit was cited in a criminal complaint filed on the grounds of qualified fraud, committed during and after the individual's employment at the company.7
- Invoice tampering related to customs procedures was evaluated as qualified fraud.8
- A construction agreement where a defendant promised to lift a mortgage after receiving payment was ruled as qualified fraud.9
- Falsely claiming checks needed to be returned to clients due to financial difficulties constituted fraud.10
- Use of company stamps on unsigned checks11 and providing fake bonds with forged signatures12 were also deemed qualified fraud.
Legal Remedies Under Turkish Law
1. Investigation and Prosecution Process
While there are specialized public prosecutors for fraud-related crimes, companies should first conduct internal investigations and evidence collection. Reports prepared—including estimates of the company's financial loss—can guide the prosecutor's office and strengthen criminal complaints.
Fraud is subject to ex officio prosecution, but it can also proceed on the basis of a formal complaint. If indications of fraud emerge during a company's the internal investigation, or if the company independently detects such misconduct, the matter should first be reported to the Public Prosecutor. Once reported, and if there is sufficient suspicion, the prosecutor may refer the matter to the conciliation office, in accordance with Article 253 of the Criminal Procedure Code, revised in 2016.
Note: Qualified forms of fraud are not subject to conciliation.
If the conciliation is successful and the suspect fulfils the agreed terms, non-prosecution may be declared. Otherwise, the matter proceeds to trial.
Executives must be ready to act swiftly and appropriately; inaction may lead to irreversible harm.
2. Criminal Penalties
- Basic form of fraud: 1 to 5 years of imprisonment and judicial fines up to 5,000 days.
- Qualified fraud: 3 to 10 years of imprisonment and judicial fines up to 5,000 days.
- Penalties increase by half if the crime is committed by three or more people, or fully double if it is committed by a criminal organization.
- Fraud committed to enforce receivables from legal relationships may incur 6 months to 1 year imprisonment or judicial fines (Article 159).
· Legal entities benefitting from fraud may also be subjected to security measures.
If fraud is committed by an organ or representative of a legal entity, or by a person who is not an organ or representative but undertakes duties within the framework of the activities of this legal entity, an administrative fine applies under the Misdemeanour Law No. 5326. For 2025, such fines range from TRY 215,234 to TRY 377,790,608, subject to inflation adjustments. Moreover, the fine cannot be less than twice the benefit obtained through the act or transaction.
3. Seizure of Property
If there is strong suspicion based on concrete evidence, the following may be seized:
- Real estate,
- Transport vehicles,
- Bank or other financial institution accounts,
- Receivables and rights,
- Valuable documents,
- Company shares,
- Contents of rented safes,
- Other assets obtained through fraudulent acts.
A valuation report must be secured to justify the seizure. Companies must ensure accurate recordkeeping to protect themselves against undue seizure or accusations.
Conclusion
Fraud poses serious financial and reputational risks for companies. Effective prevention requires:
- Robust compliance programs,
- Strong whistleblowing mechanisms,
- Active internal investigation procedures.
Addressing fraud should be embedded in company culture—serving as an organizational immune system. In the event of a suspected incident, companies are encouraged to consult legal counsel and take swift legal action in accordance with the remedies outlined above.
References
Decision by the 11th Criminal Chamber of the Court of Cassation (Only in Turkish), File No. 2022/8754, Decision No. 2023/226 (11th Criminal Chamber of the Court of Cassation January 19, 2023).
Artuk, M. E., Gökçen, A., Alşahin, M. E., & Çakır, K. (2019). Ceza Hukuku Özel Hükümler (Only in Turkish). Ankara: Adalet Yayınevi.
Decision by the 11th Criminal Chamber of the Court of Cassation (Only in Turkish), File No. 2021/13763, Decision No. 2024/1407 (11th Criminal Chamber of the Court of Cassation February 8, 2024).
Decision by the 15th Criminal Chamber of the Court of Cassation (Only in Turkish) , File No. 2015/12720, Decision No. 2018/6708 (15th Criminal Chamber of the Court of Cassation October 15, 2018).
Decision by the 15th Criminal Chamber of the Court of Cassation (Only in Turkish), File No. 2016/1470, Decision No. 2017/20810 (15th Criminal Chamber of the Court of Cassation October 19, 2017).
Decision by the 15th Criminal Chamber of the Court of Cassation (Only in Turkish), File No. 2017/6970, Decision No. 2019/10577 (15th Criminal Chamber of the Court of Cassation October 24, 2019).
Decision by the 9th Civil Chamber of the Court of Cassation (Only in Turkish), File No. 2024/8731, Decision No. 2024/12816 (9th Civil Chamber of the Court of Cassation October 1, 2024).
İç Soruşturmalar Rehberi (Only in Turkish). (2020). Retrieved from Ethics & Reputation Society (TEID): https://www.teid.org/wp-content/uploads/2020/09/ic%CC%A7-sorus%CC%A7turmalar_dijitalversiyon.pdf
Occupational Fraud 2024: A Report to the Nations. (2024). Retrieved from Association of Certified Fraud Examiners (ACFE): https://www.acfe.com/-/media/files/acfe/pdfs/rttn/2024/2024-report-to-the-nations.pdf
Özgün, K. A., Büyüksoy, T., Karaduman İşlek, S., & Özkan, B. (2024, December 24). From Internal Investigation to Prosecution in Türkiye: Part 1 - Bribery. Retrieved from CBC Law: https://www.cbclaw.com.tr/en/from-internal-investigation-to-prosecution-in-turkiye-part-1-bribery
Footnotes
1 (Özgün, Büyüksoy, Karaduman İşlek, & Özkan, 2024)
2 (Occupational Fraud 2024: A Report to the Nations, 2024) p.11
3 Ibid p.52-67
4 (İç Soruşturmalar Rehberi (Only in Turkish), 2020) p.51
5 (Artuk, Gökçen, Alşahin, & Çakır, 2019) p.630
6 (Occupational Fraud 2024: A Report to the Nations, 2024) p.23
7 (Decision by the 9th Civil Chamber of the Court of Cassation (Only in Turkish), 2024)
8 (Decision by the 15th Criminal Chamber of the Court of Cassation (Only in Turkish), 2019)
9 (Decision by the 11th Criminal Chamber of the Court of Cassation (Only in Turkish), 2024)
10 (Decision by the 15th Criminal Chamber of the Court of Cassation (Only in Turkish), 2017)
11 (Decision by the 15th Criminal Chamber of the Court of Cassation (Only in Turkish) , 2018)
12 ( Decision by the 11th Criminal Chamber of the Court of Cassation (Only in Turkish), 2023)
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
