Internal Fraud in a Turkish Subsidiary: Foreign Parent Company Legal Guide 2026

Foreign parent company discovers fraud in its Turkish subsidiary? Learn how to preserve evidence, investigate directors and employees, trace company money, file a criminal complaint, protect assets and manage corporate liability in Turkey in 2026.

Discovering internal fraud inside a Turkish subsidiary can create an immediate crisis for a foreign parent company. The problem may involve an employee stealing company money, a director transferring funds to personal accounts, fictitious suppliers, false invoices, unauthorized related-party transactions, manipulated accounting records, diverted customer payments, hidden commissions, forged corporate documents or company assets transferred to persons connected with local management.

The parent company should avoid treating every accounting irregularity as proven criminal fraud. Turkish criminal liability depends on the actual conduct. Depending on the facts, the investigation may raise issues involving fraud, breach of trust, document forgery, manipulation of electronic records, tax offences or other offences.

Turkish Criminal Code Article 157 defines fraud around deceptive conduct that causes another person to act to their or another person’s detriment while obtaining an unlawful benefit. Article 158 contains aggravated forms, including specified circumstances involving commercial activity and the use of banking or information systems.

For a foreign parent company, the first objective should usually be:

Preserve evidence → Stop continuing losses → Identify suspicious transactions → Secure corporate systems → Determine individual responsibility → Trace money and assets → Assess criminal characterization → Consider a criminal complaint → Pursue recovery and corporate remedies in parallel.

What Does Internal Fraud in a Turkish Subsidiary Look Like?

Internal fraud rarely appears in the accounting system under the label “fraud.”

It may first appear as:

• Unexplained bank transfers
• Payments to unknown suppliers
• Repeated cash withdrawals
• Fictitious consultancy invoices
• Fake expense claims
• Payments to employees’ relatives
• Transfers to directors’ personal accounts
• Customer payments redirected elsewhere
• Missing inventory
• Company vehicles transferred below market value
• Manipulated shareholder loans
• False accounting entries
• Fake board resolutions
• Forged signatures
• Altered contracts
• Unauthorized bonuses
• Undisclosed related-party transactions
• Hidden bank accounts
• Deleted emails or accounting data

One suspicious transaction does not automatically prove a crime. The company should reconstruct what actually happened.

The First 24 Hours Matter

Once credible evidence of internal fraud emerges, evidence preservation should normally take priority over confrontation.

Immediately consider preserving:

• Bank statements
• Accounting records
• Enterprise resource planning data
• Corporate email
• Company messaging accounts
• Company laptops
• Corporate phones
• Cloud storage
• Supplier files
• Contracts
• Invoices
• Board resolutions
• Shareholder resolutions
• Expense records
• Warehouse records
• Customer correspondence

Do not allow potentially relevant evidence to disappear through routine deletion policies.

Do Not Confront the Suspected Employee Too Early

A foreign parent company may understandably want to call the local manager immediately and ask:

“Where did the money go?”

Premature confrontation can create problems.

The suspected person may still control:

• Corporate banking
• Accounting software
• Email accounts
• Physical company records
• Supplier relationships
• Warehouse access
• Corporate devices

Before confrontation, determine what evidence can lawfully be preserved and what access should be secured.

Stop Continuing Losses

Evidence preservation does not mean leaving the suspected scheme operational.

Depending on the facts and corporate authority structure, the company may need to review:

• Bank signatory authority
• Payment limits
• Online banking permissions
• Corporate cards
• Accounting permissions
• Supplier creation rights
• Inventory access
• Company seals
• Electronic signatures
• Powers of attorney

Changes should be documented and implemented lawfully.

Do Not Destroy or Alter Evidence

Never respond to suspected fraud by “cleaning” the company’s records.

Do not:

• Delete suspicious transactions
• Rewrite accounting entries without an audit trail
• Remove emails
• Reset devices
• Backdate resolutions
• Manufacture contracts
• Create retrospective invoices
• Fabricate delivery documents
• Ask employees to delete messages

The original evidence may be important both for prosecution and for demonstrating that innocent directors or parent-company executives were not involved.

Identify the Exact Loss

Avoid starting with:

“Our Turkish subsidiary has been defrauded of millions.”

Instead create a transaction schedule.

Date	Amount	Sender	Recipient	Accounting Description	Approver	Concern
08.01.2026	€75,000	Subsidiary	Supplier A	Consulting	Manager X	No deliverables
22.02.2026	€120,000	Subsidiary	Company B	Equipment	CFO Y	No equipment found
14.04.2026	€50,000	Subsidiary	Director	Expense advance	Director	No receipts

This turns a general accusation into an evidence-based investigation.

Trace the Money Beyond the First Recipient

Suppose the Turkish subsidiary paid €500,000 to Supplier A.

Do not stop there.

Investigators may need to reconstruct:

Subsidiary → Supplier A → Director’s relative → Director → Cash withdrawal

or:

Subsidiary → Supplier A → Genuine subcontractors → Genuine services

These two scenarios have completely different legal implications.

Transfers to a Director’s Personal Account

A company-to-director transfer deserves careful review but is not automatically criminal.

Possible legitimate explanations include:

• Salary
• Expense reimbursement
• Director remuneration
• Repayment of a genuine shareholder loan
• Lawfully distributed dividend
• Properly documented advance

The company should examine:

Purpose → Authorization → Supporting documents → Accounting treatment → Subsequent use.

A transfer that has no genuine corporate purpose and is diverted for personal benefit presents a different risk profile.

Breach of Trust May Be Relevant

Some internal fraud cases are more accurately analyzed as breach of trust rather than classic fraud.

For example, a director may initially have lawful control over company funds but later allegedly use those entrusted assets contrary to their permitted purpose for personal or third-party benefit.

The distinction matters because criminal characterization depends on how possession or control was obtained and how the property was subsequently used.

Do not use “fraud,” “theft” and “breach of trust” interchangeably without analyzing the underlying transaction.

Fictitious Suppliers

A common internal-fraud scenario involves payments to a supplier that allegedly exists only to extract money from the subsidiary.

Investigate:

• Corporate registration
• Ownership
• Directors
• Address
• Employees
• Bank account
• Commercial capacity
• Contracts
• Purchase orders
• Deliveries
• Services
• Relationship with subsidiary employees

A newly incorporated supplier is not automatically fraudulent.

The question is whether a genuine transaction existed.

Fake Consultancy Invoices

Consultancy arrangements can be particularly difficult because there may be no physical goods.

Ask:

• What service was ordered?
• Who selected the consultant?
• Who negotiated the fee?
• What deliverables exist?
• Were meetings held?
• Are reports available?
• Who approved payment?
• Was the consultant related to an employee or director?

A contract and invoice alone do not prove that services were actually performed.

False Invoices Can Create Separate Tax Risks

If fictitious or misleading invoices were entered into the subsidiary’s tax and accounting system, the problem may extend beyond internal asset diversion.

Potential consequences can include tax inspection and, depending on the facts and statutory elements, tax-crime exposure.

The foreign parent company should therefore avoid treating suspicious invoices solely as an employment or corporate-governance issue.

Customer Payments Diverted to Personal Accounts

Suppose a sales manager tells customers:

“Our company has changed its bank account. Please send payment here.”

The account actually belongs to the manager or another controlled person.

Preserve:

• Customer emails
• Payment instructions
• Bank records
• Invoices
• Customer statements
• Internal account information

The company should identify every customer who received altered payment instructions.

Missing Cash

Where significant cash is missing, reconstruct:

Cash receipt → Cash register → Deposit obligation → Actual deposit → Person responsible.

Do not rely exclusively on the accounting ledger.

Compare it with:

• Receipts
• Bank deposits
• POS records
• Customer confirmations
• CCTV where lawfully available
• Cash-count records

Missing Inventory

Internal fraud can involve physical assets rather than bank transfers.

Examples include:

• Electronics
• Raw materials
• Finished goods
• Machinery
• Vehicles
• Spare parts

Compare:

Accounting inventory → Warehouse records → Physical count → Sales → Delivery documentation.

A stock shortage alone does not establish who took the assets.

Unauthorized Sale of Company Assets

A local director may be accused of selling machinery, vehicles or real estate without appropriate authority.

Investigate:

• Corporate authorization
• Sale agreement
• Market value
• Buyer
• Relationship with management
• Payment destination
• Accounting treatment
• Subsequent resale

A below-market transaction can be a warning sign, but poor commercial judgment is not automatically a criminal offence.

Related-Party Transactions

Payments to a company owned by:

• Director
• Employee
• Spouse
• Relative
• Business partner

require enhanced review.

Determine whether the subsidiary received genuine value.

A related-party transaction is not inherently criminal. Concealed self-dealing or fictitious transactions present different issues.

Forged Corporate Documents

Internal fraud may be supported by false:

• Board resolutions
• Shareholder resolutions
• Contracts
• Powers of attorney
• Signature circulars
• Payment instructions
• Delivery documents

Preserve the original document wherever possible.

A 2026 Court of Cassation decision concerning a disputed cheque signature emphasized the importance of obtaining genuine comparison signatures and expert examination rather than resolving disputed authorship through incomplete investigation.

The same evidentiary principle can be highly relevant when a foreign shareholder alleges that a corporate signature has been forged.

Manipulation of Accounting Data

Fraud may occur through alteration of electronic accounting records.

Potential evidence includes:

• User logs
• Modification history
• Login records
• ERP audit trails
• Backup versions
• Administrator records
• Exported ledgers

A recent 2026 Court of Cassation case illustrates that alleged manipulation of company computer/accounting data may require analysis under computer-system offences rather than simply being relabeled as document forgery or fraud without examining the alleged conduct.

This is why the parent company should investigate the mechanics of the misconduct before choosing a criminal classification.

A User Account Does Not Necessarily Identify the Human User

Suppose an accounting entry was created under:

ADMIN01

Do not automatically conclude that the registered account owner personally created it.

Investigate:

• Shared passwords
• Administrator access
• Remote access
• Device used
• Login time
• IP information
• Employee schedule

Digital attribution should be evidence-based.

Preserve Original Electronic Evidence

Do not rely only on screenshots.

Where possible, preserve:

• Original email
• Attachments
• Headers
• Native files
• Metadata
• Complete message conversations
• Accounting exports
• System logs

Screenshots may be useful, but the underlying electronic material can provide substantially more evidentiary context.

Foreign Parent Company Executives Are Not Automatically Criminally Liable

Discovery of fraud in a Turkish subsidiary does not automatically make the foreign parent company’s:

• CEO
• Board members
• CFO
• Regional director
• Shareholders

criminally responsible.

Individual conduct must be established.

Relevant questions include:

Who knew?

Who approved?

Who instructed?

Who controlled the transaction?

Who benefited?

Who concealed it?

Corporate hierarchy is not a substitute for individualized criminal evidence.

The Turkish Subsidiary Is Legally Distinct From Its Shareholder

The parent company’s ownership of the subsidiary does not mean the parent directly owns every asset in the subsidiary’s bank account.

This distinction becomes particularly important when determining:

• Who suffered the direct loss
• Who should file complaints
• Who can pursue recovery
• Who can represent the company
• Whether local management has a conflict

The parent company should review the Turkish subsidiary’s corporate representation structure immediately.

What If the Suspected Director Still Represents the Subsidiary?

This can create a serious practical conflict.

Suppose the director suspected of transferring company money is also the person authorized to represent the subsidiary.

The parent company may need to consider corporate measures concerning:

• Representation
• Management authority
• Bank authority
• Appointment or removal
• Corporate resolutions

Criminal and corporate strategy should be coordinated.

Should the Parent Company Conduct an Internal Investigation?

Often, yes.

But it should be structured carefully.

An internal investigation can determine:

What happened → When → Who participated → Amount lost → Evidence available → Continuing risk.

It should not become an exercise designed to manufacture a predetermined conclusion.

Build a Responsibility Matrix

For example:

Person	Position	Bank Authority	Supplier Authority	Accounting Access	Suspected Conduct
A	General Manager	Yes	Yes	Limited	Approved payments
B	CFO	Yes	No	Full	Recorded transactions
C	Procurement Manager	No	Yes	No	Selected supplier
D	Accountant	No	No	Full	Entered invoices

Then connect each person to actual evidence.

Interview Employees Separately

Where appropriate, conduct individual interviews rather than assembling all potentially involved employees together.

Determine:

• What the employee personally knows
• Which documents they saw
• Who instructed them
• Which systems they accessed
• Whether they raised concerns

Do not coach witnesses.

Preserve Foreign Parent Company Communications Too

Relevant evidence may not be located only in Turkey.

Preserve potentially relevant:

• Headquarters emails
• Regional management communications
• Audit reports
• Compliance reports
• Internal approvals
• Parent-company accounting
• Consolidation files

This evidence may demonstrate either knowledge or lack of knowledge at parent-company level.

Should the Foreign Parent Company File a Criminal Complaint?

Where evidence reasonably indicates criminal misconduct, a complaint to the competent Turkish authorities may be considered.

The Ministry of Justice explains that criminal investigations are conducted under the responsibility of the public prosecutor, who may collect evidence directly or through police or gendarmerie. Following the investigation, the prosecutor determines whether to pursue prosecution or issue a decision not to prosecute.

The complaint should be factual.

Avoid merely stating:

“Our director stole company money.”

Instead explain:

Transaction → Amount → Date → Authority → Recipient → Evidence → Suspected benefit.

Do Not Overstate the Criminal Allegation

A weak complaint often contains dozens of legal labels without explaining the underlying transactions.

A stronger complaint generally focuses on:

• What happened
• Who was involved
• What evidence exists
• What money or asset was lost
• How the conduct occurred

The final legal characterization belongs to the competent authorities and courts.

Fraud Requires Evidence of Deception

The Ministry of Justice’s victim-information materials emphasize that fraud involves deceptive conduct resulting in an unlawful benefit and that evidence of the deception is particularly important; otherwise, a dispute may instead be viewed as a civil debt or contractual dispute.

This distinction is especially important in shareholder and corporate disputes.

Not every failed transaction is fraud.

Request Evidence the Company Cannot Obtain Itself

A foreign parent company should preserve evidence it lawfully controls.

Investigators may be able, subject to applicable legal requirements, to obtain evidence that the company cannot independently access, such as records held by other persons or institutions.

The complaint can identify why specific evidence is relevant without pretending the company already knows what it will show.

Bank Evidence Is Often Central

Internal fraud frequently leaves a financial trail.

Investigators may compare:

Company bank account → Recipient → Subsequent transfers → Cash withdrawal → Final beneficiary.

Bank records can also exonerate suspected individuals where the actual commercial transaction differs from the allegation.

Digital Evidence Can Be Central

Recent Turkish fraud investigations publicly described by prosecutorial authorities show that investigations may involve seizure of computers, phones and other digital material, alongside bank and communication evidence.

A foreign parent company should therefore preserve relevant digital evidence before employee accounts or devices become unavailable.

Asset Recovery Requires a Separate Strategy

A criminal complaint does not automatically return company money.

The Ministry of Justice expressly notes that criminal complaints do not automatically resolve separate civil or enforcement proceedings and that financial losses may also need to be pursued through civil claims.

Accordingly, consider parallel:

Criminal investigation

Corporate proceedings

Civil recovery

Enforcement strategy

Protective measures where legally available.

Identify Recoverable Assets Early

Potential targets may include:

• Bank accounts
• Receivables
• Vehicles
• Real estate
• Company shares
• Other traceable assets

Do not wait until the end of a criminal trial before considering recovery strategy.

What If the Money Was Sent Abroad?

Cross-border transfers do not prevent investigation.

Preserve:

• Transfer instructions
• Beneficiary details
• Bank statements
• Correspondent information available to the company
• Contracts
• Invoices
• Emails

The foreign destination itself does not prove fraud.

Investigators still need to determine the commercial purpose and beneficiary.

What If the Money Was Converted Into Cryptocurrency?

Preserve:

Bank transfer → Exchange → Account → Transaction records → Wallet information.

Do not assume that a wallet address automatically identifies a particular individual.

Digital attribution requires additional evidence.

Employment Measures Should Be Coordinated With the Investigation

The company may need to suspend or dismiss implicated personnel.

But consider evidence preservation first.

Before access termination, lawfully preserve relevant corporate:

• Email
• Laptop data
• Phone data
• Shared folders
• ERP records

Employment-law decisions and criminal strategy should be coordinated.

Notify Auditors and Compliance Functions Where Appropriate

Depending on the company’s structure and obligations, internal fraud may require escalation to:

• Audit committee
• Compliance department
• Internal audit
• External auditors
• Parent-company board

The reporting chain should itself be documented.

Insurance Coverage Should Be Reviewed

Foreign parent companies should also examine whether relevant insurance policies may respond to employee dishonesty, crime, cyber incidents or related losses.

Notification deadlines and policy conditions may matter.

Do not assume criminal proceedings must finish before reviewing insurance.

Do Not Make Premature Public Accusations

Internal fraud allegations can create reputational and employment consequences.

Until facts are established, avoid unnecessarily publishing accusations against identified employees or directors.

Internal communications should distinguish:

Suspected misconduct

from

established facts.

2026 Enforcement Environment

Recent 2026 Turkish investigations demonstrate continuing use of coordinated searches, seizures of digital material and asset-related measures in serious fraud investigations. For example, prosecutorial announcements in July 2026 described fraud investigations involving simultaneous searches and seizures of substantial digital material, while other 2026 Ministry of Justice announcements describe measures concerning companies and assets in investigations involving alleged false invoices, fictitious exports and fraud-related conduct.

These examples do not establish what will happen in an individual corporate case. They do show why foreign parent companies should preserve financial, corporate and digital evidence from the beginning rather than treating internal fraud solely as an internal HR problem.

25 Immediate Steps for a Foreign Parent Company

1. Stop continuing suspicious payments where lawfully possible.
2. Preserve bank statements.
3. Preserve accounting records.
4. Preserve corporate email.
5. Preserve relevant company devices.
6. Secure ERP and accounting logs.
7. Review bank authorities.
8. Review electronic signatures and powers of attorney.
9. Identify suspicious transactions individually.
10. Identify recipients and beneficial relationships.
11. Preserve contracts and invoices.
12. Preserve supplier due diligence.
13. Preserve warehouse and inventory records.
14. Preserve customer communications.
15. Determine who approved each payment.
16. Build a responsibility matrix.
17. Trace money beyond the first recipient.
18. Preserve exculpatory evidence.
19. Avoid premature confrontation where evidence may disappear.
20. Do not delete or manufacture evidence.
21. Review subsidiary representation authority.
22. Consider a structured internal investigation.
23. Assess Turkish criminal complaint options.
24. Develop a parallel asset-recovery strategy.
25. Coordinate Turkish counsel, headquarters, audit and compliance functions.

Frequently Asked Questions

1. Can a foreign parent company report fraud discovered in its Turkish subsidiary?

Potentially, yes. The correct complainant, representation authority and direct victim of the alleged offence should be identified based on the subsidiary’s structure and the particular transaction.

2. Is an unexplained transfer to a director automatically fraud?

No. The transfer should be examined for legitimate explanations such as salary, expenses, remuneration, genuine loan repayment or another lawful corporate purpose. Authorization, documentation and ultimate use matter.

3. What if a director transferred company money to their own account?

Preserve the banking, corporate and accounting evidence and determine the stated purpose, authorization and subsequent use of the funds. Depending on the facts, different criminal and corporate-law issues may arise.

4. Can false supplier invoices constitute criminal conduct?

Potentially. The analysis depends on whether the underlying transaction existed, who created or used the documents, what each person knew and whether the invoices were also used for tax purposes.

5. Should the suspected employee be confronted immediately?

Not necessarily. Where there is a risk that evidence or assets may disappear, evidence preservation and access-control measures should be considered first.

6. Can the parent company’s directors become criminally liable?

Not automatically. Criminal responsibility must be individualized. Ownership, seniority or parent-company board membership alone does not establish participation in misconduct.

7. Can deleted accounting records be investigated?

Potentially. Backups, system logs, accounting exports, devices and other digital evidence may be relevant. Recovery is not guaranteed, so available evidence should be preserved immediately.

8. Does filing a criminal complaint automatically recover the stolen money?

No. Criminal investigation and financial recovery are related but distinct issues. Civil, corporate, enforcement and protective strategies may also be necessary.

9. What if the local director controls the Turkish subsidiary?

The parent company should review shareholder powers, board structure, representation authority, banking authority and available corporate remedies while coordinating them with the criminal investigation.

10. What is the most important first step after discovering internal fraud?

Preserve the evidence and reconstruct the transactions before conclusions are fixed. The strongest case usually connects money, authority, documents, digital records, recipient and personal benefit into one coherent evidentiary chain.

Legal Assistance for Foreign Parent Companies Facing Internal Fraud in Turkey

Internal fraud inside a Turkish subsidiary can rapidly develop into a combination of criminal investigation, shareholder dispute, director-liability claim, employment issue, tax exposure and cross-border asset-recovery problem.

Fırat Fesih Kaya Law Office provides legal assistance to foreign parent companies, foreign investors, shareholders, boards and multinational groups dealing with suspected internal fraud and corporate criminal matters in Turkey.

Lawyer Fırat Fesih Kaya assists foreign clients with internal investigations, criminal complaints, company-fund diversion, director and employee misconduct, false invoices, forged corporate records, suspicious banking transactions, digital evidence, asset tracing and coordination of criminal and corporate recovery strategies.

Early intervention can be particularly important where suspected managers still control bank accounts, accounting systems, corporate records or assets that could be transferred before the parent company completes its investigation.

Phone: +90 312 434 22 22
Mobile: +90 532 769 22 22
Email: info@firatfesihkaya.av.tr
Address: Mevlana Boulevard No:221, Yıldırım Tower No:148, 06520 Balgat, Çankaya, Ankara, Turkey

This publication is for general informational purposes and does not constitute legal advice. Internal fraud cases are highly fact-specific, and the appropriate criminal characterization, corporate measures, employment actions and recovery strategy should be determined from the evidence and current legislation applicable to the individual case.