“Analysis of the Turkish Court of Appeal's Decision on Fraud Allegations Arising from Aircraft Sales Contracts: Necessary Precautions Against Fraud Risks and Key Considerations in Turkish Criminal Proceedings”
November 11, 2024| NEWS
By Gokhan Bozkurt, Mustafa Bozkurt
Fraud and forgery are offenses that have significant financial and emotional impacts on individuals and companies alike. These crimes not only lead to financial losses but also harm a company’s reputation, customer trust, and market position. Therefore, it is critical for companies to implement effective legal and administrative measures to protect themselves from such crimes. A robust internal control system, regular audits, and the effective functioning of legal processes are among the measures that companies can take against fraud. The decision made by the Turkish Court of Appeal’s 11th Criminal Chamber (“Appeal Court or “Chamber”) on September 17, 2024, represents a significant legal development regarding the applicability of the Turkish Criminal Law System in the context of fraud and forgery. This decision provides valuable insights not only regarding the specifics of the case but also about how companies can protect themselves from such crimes.
Background
A complainant company stated in the case that it sold its Boeing 747-281F model aircraft to a company named Airlift ME DWC-LLC. They learned that during the registration of the sale with the Federal Aviation Administration of the United States Department of Transportation, the suspect sold the aircraft to another party without their knowledge, and the registration processes were carried out accordingly. They claimed that their investigation revealed the sale took place in Moldova before being registered.
In response to these allegations, the Istanbul Anatolian Chief Public Prosecutor's Office initiated a criminal investigation. At the conclusion of the investigation, the Prosecutor's Office decided there was no ground for prosecution, citing a lack of evidence to support the complainant's allegations that the documents related to the sale of the aircraft were fraudulent and that the dispute between the parties was of a civil case nature.
The complainant appealed against the Prosecutor's decision that there were no grounds for the prosecution to the Istanbul Anatolian Criminal Court (“Court”). However, the Court dismissed the complainant's objections, stating that the sale and registration processes of the aircraft occurred abroad, and there was insufficient evidence to support the claim that the documents purportedly issued in Turkey were fraudulent. They determined that the sale and ownership of the aircraft constituted a civil dispute between the parties and that the legal elements of qualified fraud had not been established, leading to a final ruling under Article 271/4 of the Turkish Criminal Procedure Law, with no right of appeal.
However, the Turkish Ministry of Justice, upon identifying a legal violation in the Court's decision, requested the Turkish Court of Appeal to annul the Court’s decision under Article 309/1 of the Turkish Criminal Procedure Law. Following this request, the Chief Public Prosecutor's Office of the Court of Appeal stated:
"According to Article 160 of the Turkish Criminal Procedure Law, when the prosecutor learns of any situation indicating that a crime has been committed, they must immediately begin investigating the facts to determine whether there is ground for a public prosecution. Under Article 170/2 of the same law, if the collected evidence creates sufficient suspicion of a crime, the prosecutor must prepare an indictment and initiate public prosecution; otherwise, they must issue a decision of no grounds for prosecution as stipulated in Article 172. However, in this case, the prosecutor failed to fulfill their investigative duty as mandated by the Criminal Procedure Law, resulting in no lawful investigation. Therefore, the reviewing authority could have accepted the appeal to ensure the prosecutor conducts an investigation.
While the Court ruled that there were no grounds for prosecution based on the justifications mentioned above, it was necessary to clarify the nature of the relationship between the complainant and the suspect, particularly in light of the suspect’s claim that they had obtained a power of attorney from the complainant. The Court needed to identify what powers this power of attorney conferred and fully ascertain the suspect’s role during these transactions. It was essential to verify the ownership information of the Boeing 747-281F by consulting relevant institutions and organizations and to obtain the original documents of the power of attorney and contracts alleged to be fraudulent, allowing for an expert examination of the writings and signatures contained in the allegedly fraudulent documents. Without such investigations, the decision of no grounds for prosecution resulting from an incomplete investigation should have led to an order to expand the investigation based on the appeal.
With these justifications, they requested that the Court of Appeal annul the decision, and the case was sent to the 11th Criminal Chamber of the Court of Appeal for review.
Decision
Upon reviewing the case, the 11th Criminal Chamber of the Court of Appeal reaffirmed the importance of thorough legal processes. They established that the prosecutor must immediately begin investigating the facts regarding whether a crime has been committed. If the collected evidence provides sufficient suspicion of a crime, the prosecutor must prepare an indictment and initiate public prosecution; otherwise, they must issue a decision of no grounds for prosecution under Article 172 of the Law. This thorough process ensures that all aspects of the case are carefully considered, providing reassurance to all parties involved.
The Chamber also noted that the Court, which reviewed the appeal against the decision of no grounds for prosecution, must reject the appeal if there is insufficient evidence to open a public prosecution. If sufficient evidence exists, they can either accept the appeal or decide to expand the investigation due to an incomplete inquiry. This role of the Chamber ensures that all parties are given a fair trial, serving the cause of justice.
Following these legal findings, the Chamber stated that the aircraft, a Boeing 747-281F model, was alleged to have been sold to a different company by the suspect without the complainant's knowledge and consent, using false documents. This information was learned during the investigation.
The Chamber indicated that the suspect claimed ownership of the aircraft, stating it was temporarily registered in the complainant's name and that he had previously conducted several registration transactions based on a power of attorney. This claim could be verified through inquiries with the Civil Aviation Authorities of Georgia, Armenia, and Moldova.
The high court continued by stating that the court should request the suspect to present any relevant documents and that the statements of the complainant's representatives, who were indicated to be officials of the complainant company, should also be considered.
Moreover, the Chamber highlighted the need to ascertain whether the suspect worked for the complainant company or held a partnership or authority by consulting the Trade Registry and the Social Security Institution. Investigations should also be conducted regarding previous registration and cancellation processes mentioned by the suspect, and the original documents alleged to be fraudulent should be procured for expert analysis of their authenticity. After these investigations, a conclusion should be reached based on the findings; however, neither the prosecution nor the court performed these necessary actions, leading to the decision of no grounds for the prosecution being ruled as unlawful in response to the appeal. Therefore, the request of the Chief Public Prosecutor’s Office was accepted, and the Court's decision was annulled and sent back to the Court for further proceedings.
According to the Appeal Court, Article 160 of the Turkish Criminal Procedure Law mandates that the prosecutor must initiate an investigation immediately upon learning of any indication that a crime has been committed. This requirement is critical for ensuring justice. However, in this case, the prosecutor failed to fulfill this legal obligation, violating their duty to promptly investigate the facts as soon as they had an impression that a crime had occurred.
The Appeal Court emphasized the importance of the prosecutor's role in the investigative process. The prosecutor is responsible for collecting evidence, interviewing witnesses, and reviewing documents during the investigation phase. However, in this case, it was determined that the prosecutor failed to gather sufficient evidence and did not deepen the investigation concerning the fraud allegations. This failure created a situation contrary to the requirements of the law, resulting in an incomplete investigation.
The Appeal Court stated that a deeper investigation is necessary to clarify the nature of the relationship between the complainant and the suspect. They clearly indicated that, in cases where the prosecutor fails to fulfill their duties, the evidence collection process regarding allegations of fraud and forgery may be insufficient. In this context, the Appeal Court stressed the need for the courts to be more diligent and meticulous in their evidence collection and investigation processes. This decision by the Appeal Court opens the door for a more effective roadmap in the fight against fraud.
Furthermore, the Appeal Court’s ruling highlights the importance of cooperation among judicial authorities and effective communication. The meticulous execution of legal processes will not only resolve the current case. Still, it will also serve as a significant guide for how similar cases should be approached in the future. This decision emphasizes the necessity of developing a comprehensive approach to combat fraud.
The Appeal Court also focused on the validity and accuracy of the documents used in the investigations. Transactions conducted with forged documents lead to a loss of trust for the victims and the entire industry. Therefore, the ability of the relevant authorities to detect such situations in advance and their diligence in the evidence-collection process is vital for upholding the rule of law.
Takeaways