İş Bank rules out claims of tax evasion

ISTANBUL

Turkey’s İş Bank has ruled of accusations in a recent indictment that its senior managers were involved in fraud and tax evasion in Petrol Ofisi, the Austrian OMV’s oil retailer which was owned by Doğan Holding in the past. 

“We would like to share with the public that we are strongly confident that the judicial process will prove that there is no legal ground of allegations regarding the bank’s chairman and managers, and necessary legal actions will be taken to protect the legal rights of our bank, the chairman and the managers of our bank,” the lender said in a filing to the stock exchange. 

The case covers the 2001-2008 period when Doğan Holding and İş Bank owned stakes in Petrol Ofisi, Turkey’s biggest chain of gas stations, now operated by Austria’s OMV, and accuses Doğan Holding Honorary Chairman Aydın Doğan and İş Bank Chairman Ersin Özince of setting up a criminal gang. 

“We have been informed that an indictment has been prepared against Petrol Ofisi A.Ş. [POAŞ] board members that served between 2001 and 2007, a period which includes the 2001-2005 period when our bank was a shareholder in POAŞ, as well as some senior managers, regarding some of the fuel import transactions of POAŞ and the said indictment has been filed with the competent court,” the bank said. 

“The indictment includes allegations against our chairman and some senior managers, who served in POAŞ as board members during the period in which our bank was a shareholder in the company,” it said. 

In the indictment, it is briefly claimed that the value of imported fuel was understated with the purpose of tax evasion and this lead to a tax loss in 56 declarations. 

The total amount of value understatement is expressed to be $6.3 million, the prosecutor claimed, accusing the company of acting with the intention of tax evasion. 

Unlawful profits have been made due to the import transactions that were conducted with the wholly-owned subsidiary of POAŞ, which was dealing with fuel procurement activities in full compliance with the relevant regulations, it also claimed, blaming board members

“As the alleged transactions of POAŞ are reviewed and evaluated, it will be seen that the import transactions were carried out under the relevant legislation by expert company personnel, consultants and service companies,” İş Bank said in the March 23 filing to the bourse. 

“The alleged import transactions were exempt of customs duty; since there is no tax loss, it is not possible to define the transactions within the context of tax evasion or as an intention to evade tax,” it said. 

It is not possible to qualify any transactions of POAŞ with its wholly-owned and fully consolidated subsidiary as an unlawful fund transfer from one company to another company, it added. 

“The board of directors, which is defined in Turkish Commercial Law and related legislation, carried out its activities as a legal body in accordance with the related laws and activities of the board of directors that were conducted in compliance with the laws and regulations are not possible to be defined as activities of an unlawful organization,” it also said.

Doğan Holding also ruled out claims in a statement on March 22, naming the accusations “very ugly slander,” saying, “There is no question of lost or missing payments in the customs taxes and value-added taxes paid for Petrol Ofisi’s imports.”