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 about criminal complaints, evidence preservation, employee and supplier liability, asset recovery, internal investigations and emergency legal measures in Turkey.

A foreign parent company may discover procurement fraud in its Turkish subsidiary through an internal audit, whistleblower complaint, unusual supplier payments, inflated invoices, suspicious tenders or undisclosed relationships between employees and vendors. The suspected scheme may involve fake suppliers, inflated purchasing prices, kickbacks, forged invoices, conflicts of interest, unauthorized payments, fictitious deliveries or cooperation between subsidiary employees and external suppliers. Once serious irregularities are discovered, the parent company should avoid treating the matter solely as an employment or accounting problem. Depending on the facts, the conduct may also trigger criminal proceedings in Turkey and require urgent action to preserve digital evidence, prevent further payments and trace company assets.

What Is Procurement Fraud?

Procurement fraud broadly refers to dishonest conduct affecting the acquisition of goods or services by a company. It can occur during supplier selection, tendering, contracting, delivery, invoicing or payment.

The precise criminal characterization depends on how the scheme was carried out.

Common Procurement Fraud Schemes in Turkish Subsidiaries

Foreign investors may encounter schemes involving fictitious suppliers, invoices for goods never delivered, artificially inflated prices, kickbacks paid to purchasing employees, manipulated tender processes, undisclosed related suppliers, duplicate invoices, false delivery records or unauthorized changes to bank-account details.

Several forms of misconduct may occur simultaneously.

Start With Evidence Preservation

The first priority should be preserving evidence before employees or external participants learn the full scope of the investigation.

Relevant material may include corporate emails, accounting records, invoices, purchase orders, tender documents, payment approvals, bank records, ERP logs, access records and internal messaging.

Do Not Alter Original Digital Evidence

Internal investigators should preserve original files and relevant metadata where possible. Documents should not simply be copied, edited and reorganized in a way that makes their history difficult to establish.

Evidence integrity can become important during criminal proceedings.

Review Employee Email Lawfully

A foreign parent company should not assume that corporate ownership gives unrestricted access to every communication. Internal investigations involving employee communications should take account of applicable privacy, employment and data-protection requirements.

The collection process itself should be documented.

Preserve ERP and Accounting Logs

Procurement fraud often leaves evidence inside enterprise systems.

Review who created the supplier, who changed payment information, who issued the purchase order, who approved receipt, who approved the invoice and who authorized payment.

System logs can reveal separation-of-duties failures.

Identify Suspicious Suppliers

Prepare a supplier matrix showing company names, shareholders where known, addresses, bank accounts, contact information, payment totals and responsible purchasing employees.

Multiple apparently independent suppliers may turn out to share the same contact information or financial connections.

Check Whether the Supplier Actually Exists

Verify whether the supplier has genuine commercial operations consistent with the volume of transactions.

A company created shortly before receiving substantial procurement contracts can require closer examination, although incorporation date alone does not establish fraud.

Compare Market Prices

Inflated procurement can be difficult to prove without a benchmark.

Obtain comparable quotations, historical prices and technical specifications to determine whether the subsidiary paid commercially unusual amounts.

Price Differences Alone Do Not Prove a Crime

Commercial prices can differ for legitimate reasons such as quality, urgency, credit terms, warranty or logistics.

The investigation should therefore connect unusual pricing with evidence of deception, undisclosed benefits or manipulation.

Investigate Kickbacks

A purchasing manager may receive money or another benefit from a supplier in return for awarding contracts.

Relevant evidence can include communications, unexplained relationships, financial transfers and coordinated procurement decisions.

Related Supplier Relationships Should Be Examined

An employee may secretly control or have an economic interest in a supplier.

Investigate connections involving relatives, business partners, shared addresses, telephone numbers or other objectively verifiable links.

Fake Delivery Schemes

The subsidiary may pay invoices even though goods were never delivered.

Compare purchase orders, warehouse entries, delivery documents, inventory records and subsequent consumption or sales.

Partial Delivery Fraud

Another scheme involves paying for a larger quantity than was actually delivered.

Physical inventory and historical warehouse records can be important.

Duplicate Invoice Fraud

Review whether identical or substantially identical invoices were paid more than once.

Accounting software may help identify matching invoice numbers, amounts, dates or supplier bank accounts.

Forged Invoices and Documents

If invoices, quotations, delivery notes or approvals appear fabricated, preserve the originals and document how they were obtained.

Do not confront suspected employees before key evidence has been secured.

Who Should Conduct the Internal Investigation?

The investigation may require cooperation among Turkish criminal counsel, corporate counsel, forensic accountants, information-technology specialists and the foreign parent company’s compliance team.

Roles should be clearly defined to avoid duplication and uncontrolled circulation of sensitive evidence.

Should the Suspected Employee Be Interviewed Immediately?

Not necessarily.

An early confrontation may alert other participants and create a risk that records are deleted or assets moved. Evidence preservation should generally be considered before substantive confrontation.

Employment Measures and Criminal Proceedings Are Separate

Suspension, disciplinary proceedings or termination of employment should be analyzed separately from criminal liability.

A criminal complaint does not automatically resolve the employment-law consequences.

Can the Turkish Subsidiary File a Criminal Complaint?

Where the subsidiary is the direct victim of the alleged misconduct, its authorized representatives can evaluate filing a criminal complaint with the competent Turkish authorities.

Corporate authorization should be documented correctly.

Can the Foreign Parent Company File the Complaint?

This depends on the parent company’s direct legal interest and the specific facts. Where the financial loss was suffered directly by the Turkish subsidiary, the subsidiary’s procedural position may differ from that of its shareholder.

The corporate structure should therefore be analyzed before filing.

Parent Company and Subsidiary Are Separate Legal Entities

Foreign investors should avoid assuming that ownership of the subsidiary automatically means that every loss is legally a direct loss of the parent.

Identify which company owned the funds, entered into the procurement contract and made the disputed payments.

Which Criminal Offences May Be Relevant?

Depending on the method used, allegations can potentially involve fraud, breach of trust, document-related offences or other offences under Turkish criminal legislation.

The criminal characterization should follow the evidence rather than being selected before the investigation is complete.

Fraud Requires Careful Factual Analysis

A bad procurement decision or expensive contract is not automatically criminal fraud.

Evidence of deceptive conduct and its relationship with the financial loss must be examined carefully.

Breach of Trust May Become Relevant

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

The exact role and authority of the individual should be documented.

Forged Commercial Documents Can Create Additional Exposure

If false invoices, signatures or other documents were deliberately created or used, document-related criminal issues may need to be investigated separately.

Preserve genuine comparison documents where available.

Managers May Also Be Involved

Procurement fraud may not be limited to purchasing employees. Senior managers can potentially participate by approving suppliers, overriding controls or authorizing payments.

Do not restrict the investigation artificially based on organizational rank.

Supplier Personnel Can Also Face Investigation

If an external supplier knowingly participated in the scheme, criminal proceedings may extend beyond subsidiary employees.

Preserve communications between internal personnel and supplier representatives.

Trace the Money

Create a complete payment chronology showing invoice, approval, bank transfer, recipient account and subsequent known movement of funds.

Financial tracing can help establish the structure of the alleged scheme.

Obtain Bank Records Through Lawful Procedures

The company can preserve its own banking documentation, but records belonging to individuals or third parties may require appropriate legal procedures during the investigation.

Do not attempt unauthorized access to personal banking information.

Can Bank Accounts Be Frozen?

In appropriate criminal proceedings and where legal conditions are satisfied, measures affecting suspected proceeds or assets may become relevant.

The availability and scope of such measures depend on the facts, suspected offence and applicable procedural requirements.

Asset Preservation May Be Urgent

If there is credible evidence that proceeds are being transferred or dissipated, counsel should evaluate available criminal and civil protective mechanisms promptly.

Delay can make later recovery substantially more difficult.

Criminal Complaint Should Be Evidence-Based

A useful criminal complaint should explain the scheme chronologically and connect allegations with supporting documents.

Simply submitting thousands of accounting pages without explaining their significance can make a complex procurement case difficult to understand.

Prepare a Transaction Matrix

For each suspicious transaction, identify:

supplier; purchase order; invoice; goods or services supposedly supplied; responsible employee; approval chain; amount paid; payment date; bank account; suspected irregularity; and supporting evidence.

This can significantly improve clarity.

Quantify the Loss Carefully

Separate confirmed loss from suspected exposure.

Inflated-price cases can require forensic accounting because the company received some value even though it allegedly overpaid.

Preserve Witness Evidence

Employees who observed supplier selection, delivery, invoice approval or unusual instructions may possess important information.

Record their roles and relevant events accurately without coaching them to adopt a particular narrative.

Whistleblower Identity Requires Care

If the investigation originated from an internal report, unnecessary disclosure of the whistleblower’s identity can create employment, privacy and evidentiary problems.

Access to sensitive information should be limited.

Foreign Headquarters Should Control Information Flow

A multinational investigation can involve executives in several jurisdictions.

Create a defined reporting structure and avoid circulating unverified allegations widely by email.

Consider Data Transfer Issues

Sending employee emails and investigation files from Turkey to foreign headquarters can raise separate data-protection questions.

Cross-border transfer and access arrangements should be reviewed as part of the investigation plan.

Preserve Documents Before Employees Leave

If employment termination is contemplated, ensure that relevant corporate devices, files and access records are preserved lawfully before accounts are closed or equipment is wiped.

Company Phones and Laptops Can Be Important

Corporate devices may contain communications, supplier contacts, photographs, messaging records and document histories.

Collection should be performed in a manner that preserves evidentiary integrity and respects applicable legal limitations.

Personal Messaging Creates More Difficult Questions

The fact that an employee used a personal messaging account for company business does not automatically give the employer unrestricted access to the entire account.

Evidence collection methods should be evaluated carefully.

Do Not Encourage Illegal Evidence Collection

Managers should not be instructed to obtain private passwords, secretly access personal accounts or unlawfully intercept communications.

Improper evidence-gathering can create separate legal problems.

Consider Civil Recovery Alongside Criminal Proceedings

A criminal investigation may assist in establishing wrongdoing, but the company should separately evaluate civil and commercial remedies for recovery of losses.

Waiting exclusively for the criminal case may not always be commercially appropriate.

Review Supplier Contracts

Examine representations, audit rights, anti-bribery provisions, termination rights, indemnities and dispute-resolution clauses.

Contractual claims may exist even where criminal intent cannot ultimately be proven.

Stop Further Losses

After evidence is secured, review whether suspicious supplier payments should be suspended and whether procurement authority needs temporary restructuring.

Internal controls should be strengthened immediately.

Review Other Transactions With the Same Supplier

A suspicious invoice may be only one part of a longer pattern.

Examine previous years, related suppliers and similar procurement categories.

Review Other Subsidiaries if Necessary

If the same employee, supplier or procurement structure operates across several group companies, determine whether the risk extends beyond the Turkish subsidiary.

This should be done based on concrete connections rather than unsupported assumptions.

Voluntary Corporate Remediation Can Be Important

After identifying control failures, strengthen vendor onboarding, conflict-of-interest declarations, approval thresholds, payment controls and segregation of duties.

The objective should be to prevent recurrence, not merely investigate historical misconduct.

Keep the Criminal Investigation Confidential

Public accusations before the evidence is established can create unnecessary legal and reputational exposure.

Communications should distinguish confirmed facts from allegations under investigation.

Foreign Executives Should Prepare for Turkish Proceedings

Foreign parent-company representatives may need to provide documents or explain the corporate relationship.

They should understand the subsidiary’s structure and investigation chronology before participating in formal proceedings.

What If a Suspect Leaves Turkey?

The company should inform counsel promptly if there is evidence relevant to flight or asset-dissipation risk. Any coercive criminal-procedure measure remains a matter for the competent Turkish authorities and courts under the applicable legal conditions.

What If the Supplier Is Abroad?

Cross-border evidence and recovery can become more complicated where the supplier or assets are located outside Turkey.

Contracts, payment routes, foreign corporate records and applicable international procedures should be mapped early.

Immediate Response Plan for Foreign Parent Companies

When procurement fraud is discovered in a Turkish subsidiary, the foreign parent company should immediately preserve digital and accounting evidence, secure corporate devices and system logs lawfully, identify suspicious suppliers and transactions, map approval chains, quantify potential losses, conduct an appropriately structured internal investigation, evaluate employment measures, determine whether the subsidiary should file a criminal complaint, assess urgent asset-preservation measures and pursue contractual or civil recovery in parallel where appropriate.

Frequently Asked Questions

Is an inflated procurement price automatically criminal fraud?

No. High pricing alone does not establish criminal conduct. The circumstances surrounding deception, collusion, undisclosed benefits and resulting loss must be examined.

Can a foreign parent company report fraud committed against its Turkish subsidiary?

The procedural position depends on which legal entity directly suffered the alleged offence and loss. The subsidiary’s and shareholder’s positions should be analyzed separately.

Should the employee be confronted immediately?

Not necessarily. Evidence should generally be secured first where there is a realistic risk of deletion, coordination or asset dissipation.

Can company emails be used as evidence?

Potentially, but collection and use should comply with applicable employment, privacy, data-protection and criminal-procedure requirements.

Can the company obtain the suspect’s personal bank records?

Personal banking information should be obtained through lawful procedures. The company should preserve its own payment records and allow competent authorities to obtain protected third-party records where appropriate.

Can assets be frozen during the criminal investigation?

Potentially, where the applicable criminal-procedure requirements for protective measures are satisfied. This depends on the alleged offence, evidence and judicial or prosecutorial process.

Can the company recover losses from the supplier?

Potentially. Contractual and civil claims should be evaluated separately from criminal liability.

What if the procurement employee and supplier worked together?

Evidence concerning communications, payments, supplier selection, pricing and approvals should be preserved so that the alleged coordinated scheme can be evaluated.

Should the foreign parent company investigate previous years?

Yes, where the evidence indicates that the suspected scheme may predate the transaction that initially triggered the investigation.

What is the most important first step?

Preserve evidence before confronting suspected participants. Procurement fraud cases can collapse if emails, ERP records, payment data, supplier documents or digital evidence are deleted before the company understands the structure of the scheme.

Client-Focused Legal Support for Procurement Fraud and Corporate Criminal Investigations

Procurement fraud in a Turkish subsidiary can involve employee misconduct, supplier collusion, forged documents, kickbacks, fraudulent invoices, unauthorized payments, asset tracing, criminal complaints and parallel civil recovery claims. Fırat Fesih Kaya Law Office assists foreign parent companies, international investors and Turkish subsidiaries facing internal fraud and corporate criminal investigations in Turkey. Lawyer Fırat Fesih Kaya provides legal assistance in evidence preservation, internal investigation strategy, criminal complaints, representation during prosecution proceedings, urgent protective measures, supplier disputes and recovery of corporate losses.

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