- Nihat Zeybekci, deputy chairman for economic affairs of Erdogan AK Party, said four companies owned by his family have as much as 230 million liras, about $4.7 million, trapped in a frozen money-market fund run by Tera Portfoy Yonetimi. He said his companies appear on a list of 455,000 victims and that authorities could have stopped the problem more than a year ago.
- The fund, TP2, was generating returns of around 3.5% to 4% a month, against 2.5% to 3% for most Turkish money-market funds, which are meant as a safe place to park short-term cash. TP2 described its portfolio as liquid money and capital market instruments with maturities of no more than 184 days.
- His companies submitted redemption orders on September 16 and the money has been trapped since as the fund enters liquidation. Erdogan this week created a board led by Vice President Cevdet Yilmaz to oversee the winding up of more than 100 funds.
- The consequences are operational rather than investment losses for many holders. Zeybekci said business owners have told him they cannot access money set aside for wages, describing people with hundreds of employees whose payroll cash is locked in the funds.
What Happened?
Zeybekci said the investments came from surplus cash at four of the 11 companies his family owns in Denizli, which together employ about 1,150 people, and that finance officials told him roughly two months ago the money had gone into the fund and regarded it as low-risk. He directed criticism at the Capital Markets Board, Borsa Istanbul and the Central Securities Depository, arguing they have the means to monitor irregular transactions. Representatives for the Capital Markets Board and Borsa Istanbul declined to comment and the Central Securities Depository did not respond. The Capital Markets Board has said new fund guidelines aimed at curbing manipulation and improving transparency had been in preparation since late 2025. Former Capital Markets Board chairman Ibrahim Omer Gonul will testify as a suspect in the investigation according to NTV, and did not answer a call from Bloomberg. AK Party deputy chair Fatma Betul Sayan Kaya stepped down following allegations about suspicious stock trades and said on X that she wants the claims clarified without leaving room for doubt.
Why It Matters?
The yield gap is the entire lesson and it is quantifiable. A fund returning 3.5% to 4% monthly against a peer range of 2.5% to 3% was offering roughly 40% more income on an instrument whose stated purpose is capital preservation. Money-market funds hold short-dated liquid instruments, and that asset class has no legitimate route to outperforming its peers by that margin. Excess yield in cash management is not skill, it is undisclosed risk, and treasurers and family offices should treat a persistent premium over comparable funds as the reason to investigate rather than the reason to invest. Zeybekci says his own finance officials classified it as low-risk, which is precisely how these losses occur. The second point matters more for the real economy. These were not investment portfolios but operating accounts, and Turkish businesses routinely use money-market funds to manage short-term liquidity. A redemption freeze therefore stops wage payments and supplier settlements at companies that are otherwise solvent, converting a fund scandal into a payroll crisis. That transmission is why runs on cash-equivalent vehicles are treated differently from losses in other asset classes, and it is a risk any business parking working capital in pooled vehicles should have mapped. For investors in Turkish assets, the equity market has already fallen into a bear market and more than 100 funds are being liquidated, so the question is whether the damage stays contained to the fund industry or spreads through the corporate sector as liquidity is withheld. Zeybekci expectation that people will abandon funds for traditional savings instruments, if it holds, would remove a significant source of demand from Turkish capital markets.
What Next?
The liquidation board under Vice President Yilmaz will determine how and when investors are repaid, and Zeybekci has argued liquid assets should be sold first with proceeds distributed proportionally. How quickly any distribution occurs is the immediate question for companies waiting on payroll cash. Watch the scope of the criminal investigation, given that a former Capital Markets Board chairman is to testify as a suspect and a senior party official has already resigned. The Capital Markets Board new fund guidelines are the regulatory response, and their content will show whether the rules address the yield anomalies that flagged this fund. For markets, track whether the Turkish bear market extends beyond the financial sector and whether redemption restrictions spread to other funds, which would widen the liquidity squeeze. Foreign investors holding Turkish equities should expect continued volatility while the liquidation proceeds.
Affected Tickers and Coins: TUR, EEM
Source: Bloomberg
