Procurement Fraud in a Turkish Subsidiary: Criminal Remedies for Foreign Parent Companies (2026 Updated Guide)

A foreign parent company discovers procurement fraud in its Turkish subsidiary. Learn how to preserve evidence, investigate employees and suppliers, file criminal complaints, recover company assets and protect the parent company in Turkey.

Foreign groups operating through Turkish subsidiaries can suffer substantial losses when employees, managers, procurement personnel or suppliers manipulate purchasing processes for personal benefit. Procurement fraud may involve fake suppliers, inflated invoices, kickbacks, undisclosed related parties, fictitious purchases, duplicate payments, false delivery records, manipulated tenders or company funds transferred for goods that were never supplied.

When the problem is discovered, the foreign parent company should not treat the matter exclusively as an internal compliance issue. Depending on the facts, the conduct may potentially involve fraud, breach of trust, forgery, bribery or other offenses under Turkish criminal law. At the same time, the company may need urgent measures to preserve evidence and prevent disappearance of money or assets.

What Is Procurement Fraud in a Turkish Subsidiary?

Procurement fraud broadly describes dishonest manipulation of a company’s purchasing process to obtain an unlawful financial advantage.

The scheme can involve an employee acting alone, cooperation between company personnel and an outside supplier, or a wider network involving managers, accounting staff and related companies.

Common Procurement Fraud Schemes

Typical warning signs include:

• purchases from fictitious suppliers;
• inflated purchase prices;
• invoices for goods never delivered;
• duplicate invoices;
• payments to suppliers controlled by employees;
• secret commissions or kickbacks;
• manipulation of competitive bids;
• splitting purchases to avoid approval limits;
• false quotations from competing suppliers;
• unauthorized advance payments;
• altered bank-account information;
• payments for inferior or reduced quantities;
• false warehouse-entry records;
• forged purchase approvals.

The criminal analysis depends on what actually occurred rather than the label given to the conduct by the company’s internal audit team.

Start With Evidence Preservation

The first hours and days after discovery can be critical.

The subsidiary should preserve relevant emails, procurement records, purchase orders, supplier quotations, invoices, payment instructions, accounting records, warehouse documents, contracts and approval records.

Deleting or altering records during the investigation can seriously weaken the company’s position.

Preserve Company Emails

Relevant corporate email accounts should be preserved in accordance with applicable law and company procedures.

Investigators should identify communications among procurement personnel, managers, accounting employees and suppliers.

Preserve Messaging Evidence

Business communications through messaging applications may also become relevant.

Screenshots alone may not always provide the strongest evidentiary record. The company should preserve available original electronic information and surrounding context where legally possible.

Do Not Conduct an Uncontrolled Internal Investigation

Foreign headquarters sometimes immediately instruct local IT personnel to copy every employee device and email account.

This can create separate privacy, employment and evidentiary problems.

Internal investigations should therefore be structured carefully, particularly where employee communications and personal data may be involved.

Secure Procurement Records

Collect the complete procurement file rather than only suspicious invoices.

This may include requisitions, approval forms, quotations, bid comparisons, supplier-selection records, purchase orders, delivery notes and payment approvals.

The objective is to reconstruct the transaction from beginning to end.

Compare Purchase Prices With Market Prices

Inflated pricing can sometimes be detected by comparing the subsidiary’s purchases with comparable market transactions.

However, a high price alone does not automatically prove criminal fraud. Product quality, delivery conditions, volume, currency movements and commercial circumstances should also be examined.

Investigate the Supplier

Determine who legally and economically controls the supplier.

Important questions include whether the supplier is connected with an employee, director, relative or intermediary and whether it has genuine employees, premises and commercial activity.

Check for Undisclosed Related Parties

A procurement manager may secretly direct purchases to a company owned by a family member or business associate.

Corporate ownership and management records can therefore become important evidence.

Review Bank Payments

Trace payments from the Turkish subsidiary to suppliers.

Identify payment dates, amounts, beneficiary accounts and descriptions.

Where money subsequently moves through several entities, further financial investigation may become necessary.

Cash Payments Require Special Attention

Unusual cash withdrawals or cash supplier payments should be investigated carefully.

Determine who authorized the payment, who allegedly received the money and whether supporting documents are genuine.

Examine Advance Payments

Large advance payments made without ordinary commercial safeguards can be a warning sign.

Check whether goods were subsequently delivered and whether the advance complied with internal approval procedures.

Fake Suppliers Can Be Used to Extract Company Money

A fictitious supplier may issue invoices for services or goods that never existed.

The company should verify whether the supplier actually possessed the operational capacity to perform the transaction.

Goods May Exist but Quantities Can Be Manipulated

Procurement fraud does not always involve completely fictitious purchases.

For example, the subsidiary may pay for 10,000 units while only 7,000 are delivered.

Warehouse and inventory records should therefore be compared with purchase and payment documentation.

Inspect Warehouse Records

Goods-receipt documents can become central evidence.

Determine who confirmed delivery and whether physical inventory records support the quantities appearing on invoices.

False Delivery Confirmation Can Expand the Investigation

If warehouse employees knowingly confirmed delivery of goods that never arrived, the scheme may involve several participants.

Interview and document the roles of employees separately rather than assuming a single person was responsible.

Can Procurement Fraud Constitute Fraud Under Turkish Criminal Law?

Potentially.

Where deceptive conduct is used to obtain an unlawful benefit causing financial loss, the facts may require examination under Turkish fraud provisions.

The precise criminal characterization depends on how the scheme operated.

Breach of Trust May Also Be Relevant

Where an employee or manager abuses control over company assets or authority entrusted to them, breach-of-trust issues may arise depending on the circumstances.

The distinction between fraud and breach of trust should be determined from the actual conduct.

Forged Documents Can Create Separate Criminal Exposure

False invoices, fabricated quotations, forged signatures, manipulated delivery records or altered corporate documents may raise document-forgery issues in addition to the underlying financial offense.

Original documents should therefore be preserved.

Kickbacks Can Create Additional Risks

If an employee receives secret payments from a supplier in exchange for awarding contracts or approving inflated prices, the arrangement requires separate criminal and corporate analysis.

The investigation should identify both sides of the payment.

Can the Foreign Parent Company File a Criminal Complaint?

The corporate structure should first be examined.

If the direct financial loss belongs to the Turkish subsidiary, the subsidiary’s status as the injured legal entity and its representation should be handled correctly.

The foreign parent company may nevertheless have an important role where it has suffered its own direct loss or possesses relevant evidence.

Who Can Represent the Turkish Subsidiary?

Before filing a complaint, verify the company’s authorized representatives.

This becomes particularly important where the suspected person is a director or another individual who would ordinarily represent the company.

Corporate resolutions or alternative representation arrangements may become necessary.

What If the General Manager Is Suspected?

The company should immediately review signature and representation authority.

Allowing a suspected manager to retain unrestricted access to company accounts, procurement systems or records can create additional risk.

Any corporate and employment measures should nevertheless comply with applicable law.

Should the Employee Be Confronted Immediately?

Not necessarily.

Premature confrontation can result in evidence being deleted, witnesses coordinating their accounts or assets being transferred.

The company should first determine what evidence needs to be secured.

Criminal Complaint to the Public Prosecutor

Where sufficient indications of criminal conduct exist, the company can evaluate filing a detailed criminal complaint with the competent Turkish public prosecutor’s office.

A useful complaint should explain the transaction structure and provide organized supporting evidence.

Avoid Filing a Disorganized Document Dump

Sending thousands of invoices to the prosecutor without explaining the suspected scheme may make the case unnecessarily difficult to understand.

Prepare a transaction chronology and identify the key participants, payments and evidence.

Create a Fraud Transaction Matrix

For a large investigation, prepare a table containing:

transaction date; supplier; invoice number; amount; approving employee; payment recipient; alleged irregularity; delivery status; and supporting evidence.

This can significantly improve both internal and criminal investigation strategy.

Can Bank Accounts Be Investigated?

Financial records may become important during a criminal investigation.

Where legally justified, prosecutors and courts have investigative powers that can be used to obtain relevant financial evidence.

The company itself should preserve the bank records already lawfully available to it.

Can Suspects’ Assets Be Seized?

Depending on the alleged offense, evidentiary situation and applicable criminal-procedure requirements, asset-related protective measures may potentially become relevant.

Such measures are not automatic merely because a company files a complaint.

Act Quickly If Money Is Disappearing

If there is evidence that suspected proceeds are being transferred, converted or concealed, the company’s lawyers should evaluate urgent criminal and civil remedies.

Delay can make recovery substantially more difficult.

Criminal Proceedings and Compensation Claims Are Different

A criminal investigation can establish wrongdoing and potentially support recovery efforts, but the company should not rely exclusively on criminal proceedings to recover its losses.

Civil, commercial, employment and corporate remedies may need to proceed separately.

Consider a Civil Claim Against the Employee

Depending on the facts, the subsidiary may have claims against employees or managers responsible for the loss.

The amount of damage should be calculated carefully.

Claims Against the Supplier May Also Be Available

If the supplier participated in the fraudulent arrangement, contractual and tort-based claims may need to be evaluated alongside the criminal complaint.

Consider Interim Civil Protection

Where there is a genuine risk that defendants will dispose of assets, available interim measures should be assessed promptly under the applicable procedural conditions.

The evidentiary threshold and procedural route depend on the claim.

Employment Measures Must Be Coordinated

The subsidiary may also need to suspend or terminate employees involved in the suspected conduct.

Criminal, employment and internal-investigation strategies should be coordinated so that one process does not unnecessarily damage another.

Preserve Employee Statements Carefully

If employees are interviewed internally, record who conducted the interview, when it occurred and what documents were shown.

Do not pressure employees into signing inaccurate statements merely to create evidence for a criminal complaint.

Foreign Headquarters Should Preserve Its Own Evidence

The parent company may possess relevant emails, audit reports, compliance alerts, internal approvals and communications with Turkish management.

These records should be preserved as soon as the issue is identified.

Translation of Foreign Evidence

Documents created outside Turkey may need accurate translation for use in Turkish proceedings.

Important accounting and procurement terminology should be translated consistently.

Investigate Whether the Fraud Crosses Borders

Payments may have been transferred abroad or suppliers may be controlled from another jurisdiction.

International evidence and asset-recovery issues can therefore arise.

Review Whether Other Subsidiaries Were Targeted

A supplier involved in fraudulent procurement in Turkey may also have transactions with other companies within the foreign corporate group.

A targeted group-wide review may reveal a broader scheme.

Conduct a Historical Procurement Review

Once a suspicious supplier or employee is identified, review earlier transactions involving the same participants.

Procurement fraud frequently develops over time rather than beginning with a single large transaction.

Determine the Total Loss

Separate confirmed losses from suspected losses.

Calculate overpayments, fictitious purchases, missing inventory, unauthorized commissions and other directly documented financial harm.

Avoid artificially inflating the criminal complaint.

Preserve Evidence of Corporate Damage

Keep audit reports, bank records, invoices and accounting adjustments demonstrating the financial effect on the subsidiary.

If operations were disrupted, preserve supporting records separately.

Consider Directors’ Responsibilities

If senior management ignored repeated warnings or failed to implement basic controls, separate corporate responsibility issues may arise.

This does not automatically mean that negligent managers are criminally responsible for the underlying fraud.

Individual conduct must be assessed separately.

Do Not Assume Every Internal-Control Failure Is a Crime

Poor procurement procedures, negligent approval and commercially bad decisions do not automatically amount to criminal conduct.

The investigation should distinguish intentional dishonest behavior from negligence and ordinary commercial error.

Avoid Public Accusations Before the Evidence Is Clear

Prematurely accusing employees or suppliers publicly can create unnecessary legal exposure and interfere with the investigation.

Internal communications should remain factual and controlled.

Review the Company’s Procurement Controls

After the immediate investigation, determine how the scheme became possible.

Relevant controls may include dual approval, supplier onboarding, beneficial-owner checks, competitive quotations, payment verification and segregation of duties.

Separate Supplier Creation From Payment Approval

Allowing one employee to create a supplier, approve its invoices and authorize payment creates significant internal-control risk.

Foreign parent companies should consider whether responsibilities are adequately separated.

Introduce Conflict-of-Interest Declarations

Employees involved in procurement should disclose relevant relationships with suppliers.

Periodic updates can help identify undisclosed connections.

Review Supplier Bank-Account Changes

Fraud can also involve legitimate suppliers whose bank details are fraudulently changed.

Independent verification of significant bank-account changes can reduce this risk.

Preserve the Audit Trail

Electronic procurement systems should record who created, modified and approved transactions.

Audit logs can become powerful evidence in a later criminal investigation.

Immediate Action Plan for the Foreign Parent Company

When procurement fraud is suspected in a Turkish subsidiary, the group should immediately preserve electronic and accounting evidence, secure procurement records, identify suspicious suppliers, trace payments, review corporate relationships, protect company systems and assets, determine who can legally represent the subsidiary, calculate preliminary losses, coordinate employment measures, prepare an organized criminal complaint where justified and evaluate parallel civil recovery measures.

Frequently Asked Questions

Can an employee who manipulates procurement be criminally prosecuted in Turkey?

Potentially. The applicable offense depends on the method used, including whether the conduct involves deception, misuse of entrusted assets, forged documents or another criminal act.

Can a foreign parent company directly file the complaint?

The corporate structure and identity of the injured party should be examined. Where the Turkish subsidiary directly suffered the loss, its representation in the criminal proceedings is particularly important.

What if the subsidiary’s director is involved?

Representation authority should be reviewed immediately, and appropriate corporate measures may be necessary to protect the subsidiary and authorize legal action.

Should suspected employees be dismissed immediately?

Employment action depends on the available evidence and applicable labor-law requirements. Evidence preservation should also be considered before confrontation.

Can supplier bank accounts be frozen?

Protective measures may potentially be available where the statutory requirements are satisfied, but they are not automatic upon filing a criminal complaint.

Can the company recover money through the criminal case?

Criminal proceedings may assist the overall recovery strategy, but separate civil, commercial or employment claims may also be necessary.

Are company emails usable as evidence?

Corporate communications can potentially be relevant, but their collection and use should comply with applicable privacy, employment and procedural requirements.

What if the supplier issued real invoices but charged inflated prices?

An inflated price alone does not automatically establish criminal fraud. Evidence of deception, collusion, kickbacks or another dishonest mechanism may be necessary depending on the allegation.

Should historical purchases be reviewed?

Yes. Once a suspicious supplier or employee is identified, earlier transactions involving the same parties should be examined for recurring patterns.

What is the most important first step?

Preserve the evidence before confronting suspected participants. Procurement fraud cases can depend heavily on emails, accounting records, supplier relationships, payment trails, approval logs and original documents that may become difficult to recover once the investigation becomes known.

Client-Focused Legal Support for Procurement Fraud in Turkish Subsidiaries

Procurement fraud involving a Turkish subsidiary can require simultaneous criminal investigation, forensic evidence preservation, corporate representation, employee action, asset recovery and claims against suppliers or managers. Fırat Fesih Kaya Law Office assists foreign parent companies, international investors and Turkish subsidiaries facing internal fraud and white-collar criminal investigations in Turkey. Lawyer Fırat Fesih Kaya provides legal assistance in preserving evidence, preparing criminal complaints, coordinating internal investigations, protecting corporate assets, representing companies during prosecutor investigations and developing parallel recovery strategies against responsible employees, managers and third parties.

Phone: +90 312 434 22 22

Mobile: +90 532 769 22 22

Email: info@firatfesihkaya.av.tr

Address: Mevlana Boulevard No:221, Yıldırım Tower, Office No:148, 06520 Balgat, Çankaya, Ankara, Turkey