Category: Turkiye

Paksoy has advised Ajinomoto, a Japan-based multinational corporation producing food ingredients, on its TL 220 million acquisition of Orgen Gida, a Turkish producer of soup, bouillon, ready-made desserts, and mixed food business, and its Bizim Mutfak brand, from Yildiz Holding and the Orgen Family. Balciolu Selcuk Akman Keki Attorney Partnership (BASEAK) advised the sellers on the transaction, which remains contingent on final approval from the Turkish Competition Board.

The Paksoy team was led by Partner Togan Turan, working with Senior Associate Nihan Bacanak and Associate Can Aksoy.

The BASEAK team was led by Partner Galip Selcuk and included Counsel Tulu Harsa and Associates Umut Can Cano, Naz Hocaoglu, and Yasemin Guctekin.

Paksoy advises BNP Paribas (Suisse) on a commodity financing in the amount of EUR 140 million provided to Toprak Mahsulleri Ofisi.

Toprak Mahsulleri Ofisi is a Turkish state entity supporting agriculture. The loan provided to TMO was secured by the agricultural commodities through warrants issued by the borrower in form of negotiable instruments.

The Paksoy team was led by Partner Sera Somay and Senior Associate Ozlem Barut, with assistance from Associate Soner Dagli.

Since the enactment of the Foreign Corrupt Practices Act (“FCPA”) on 1977, USA has been the leading the international fight against corruption. FCPA sets forth a standard for other jurisdictions in its extraterritorial and rigorous enforcement of its rules and regulations against corruption.

In addition, OECD Convention on Combatting Bribery of Foreign Public Officials in International Business Transactions (“Convention”) has been another push force in the field, obliging its signatories on a global scale to strengthen their laws to fight international corruption. Following the US leadership and acting under the awareness raised by the Convention on the issue, recent years witnessed legislative developments from many countries which sought more effective ways of fighting corruption.  This article will focus on two of the recent legislative updates in the arena of fighting corruption, namely, the developments in France and Germany. 

France

On 8 November 2016, Sapin II, an anti-corruption reform law, was accepted by the French parliament. This was preceded by months of debate and alterations regarding the content of the proposed legislation. The reform comes after criticism that France has not enforced any foreign bribery cases, even though large French companies such as Total, Technip and Alstom has been subject of US anti-corruption enforcement actions within scope of the Foreign Corrupt Practices Act. All three companies agreed to pay more than $300 million to settle the FCPA charges. In addition, Transparency International’s Exporting Corruption Report of 2015 criticizes French anti-corruption law due to the lack of enforcement of the foreign bribery offence.¹  With this, France has now joined other European countries (such as Germany and Spain) who have updated their anti-corruption legislations.

One of the most important reforms legislated with the Sapin II is the obligation on large firms to enforce compliance programs. Accordingly, companies with more than 500 hundred employees and annual revenue of at least € 100 million are obliged to enforce compliance programs. The compliance program should include (i) a risk assessment mechanism, (ii) a code of conduct, (iii) accounting controls, (iv) third party due diligence mechanism, (v) a system for internally reporting suspected wrongdoings, (vi) training for employees, (vii) a policy regarding the disciplinary actions to be taken where necessary and (viii) a mechanism for evaluating the compliance system. In case companies do not abide by this requirement, the new anti-corruption agency to be established as per Sapin II, will have the power to (i) impose fines, (ii) issue warnings or (iii) injunctions and (iv) the agency may publish this decision. 

Further, Sapin II introduces US-style deferred prosecution agreements (“DPAs”) to the French legal system for corruption crimes. 

The law also imposes a whistleblower regime, whereby the whistleblowers are to be protected from retaliation, and their identities should stay secret. 

Further, foreign companies which conduct whole or part of their businesses in France can be prosecuted under Sapin II for foreign bribery. Prior to Sapin II, the French law only applied to its citizens or businesses incorporated in France in foreign countries, if these acts are punishable under the legislation of the country, where the crime was committed. This was a much criticized aspect of the French legislation as an impediment for the enforcement of the crime of foreign bribery.

Finally, a separate anti-corruption agency with more powers than its predecessor will be established as per Sapin II. Currently, Service Central de Répression de la Corruption is the authority to deal with the anti-corruption matters whose originally vast powers were reduced and which was put in a more passive position through court decisions. The agency proposed in Sapin II will recommend anti-corruption measures to administrative authorities and companies and will be able to monitor the compliance program obligations of large companies. 

With this new law, France aims to address the criticisms that it does not have any foreign anti-bribery cases. The French anti-corruption regulations are aimed to be more up-to-date and deterrent against international corruption. 

Germany

According to Transparency International’s Exporting Corruption Report, Germany has an active enforcement of anti-corruption laws. Under German law, active and passive bribery and also bribery of foreign officials are prohibited. Similar to Turkish law, German law does not recognize criminal liability for companies. Instead, companies are held civilly liable. In recent years, Germany reformed its anti-corruption regulations in several aspects and the new law entered into force in 25 November 2015. With this law (i) the scope of foreign official has been extended, (ii) changes regarding private sector has been made and (iii) reforms for money laundering have been enacted. 

German Law against Corruption, which entered into force in late 2015, regulates that European Officials too, will now be considered as German officials within scope of corruption crimes. This means that even if a certain official may not be a German citizen, the German Law against Corruption will apply to them nevertheless. In addition, with the new law foreign officials who accept bribes can be prosecuted in Germany.  Further, German law now can be applied to offences committed by a German citizen abroad or by European public officials who have their office in Germany.

Another change was in the private sector. Previous law did not cover the private sector bribes that were evaluated to be outside the scope of market competition. Following the enactment of the new law, private to private bribery now includes cases where accepting or giving any benefits without the business owner’s consent leads to a breach of duty. Accordingly, accepting or giving any benefits during the scope of a business without the business owners’ consent is prohibited and disruption of market competition is not a requirement. 

The new law introduced reforms regarding money laundering too. Before the new law, it was not a crime for a person to launder money in the context of their own crimes. The new law criminalizes this offence called “Self-money laundering”. In addition, the new law extends the catalogue of relevant predicate offences (such as accepting and giving bribes in the scope of commercial businesses) for money laundering.  

Conclusion 

Although legislative documents such as the FCPA or the Convention set out the basics for how to fight international corruption, there is not a pre-defined formula for establishing framework for the most effective fight. Once the minimum thresholds are met (such as criminalizing foreign bribery, establishing a form of liability for legal persons etc.) each jurisdiction is free to fill its own legislative and enforcement gaps.  Within this scope, France and Germany are the latest European countries to increase their efforts to fight corruption. Much like the legislators who work to ameliorate their legislations for fighting corruption, companies active / headquartered in France and Germany should also be vigilant about these legislative developments and adapt to the changing environment.    

(First published in Mondaq on November 14, 2016.)

By Gönenç Gürkaynak, Managing Partner, C. Olgu Kama, Partner, and Burcu Ergun, Associate, ELIG, Attorneys-at-Law

1. www.transparency.org/exporting_corruption/France

Paksoy is reporting that it advised Turkiye Ihracat Kredi Bankasi (Turk Eximbank), Turkey’s official export credit agency, on its October 24 2016 issuance of USD 500 million bonds due 2023 under its USD 1.5 billion Global Medium Term Note Program. Linklaters acted as counsel to Turk Eximbank on English law aspects of the project, and Allen & Overy reportedly advised the banks on the issuance.

The Paksoy team acting as local counsel to the issuer was led by Partner Omer Collak, assisted by Associates Pinar Tuzun and Soner Dagli. 

Allen & Overy did not reply to our inquiry on the matter.

The Esin Attorney Partnership, a member firm of Baker & McKenzie International, and Baker & McKenzie’s Frankfurt office, have advised underwriters Ak Yatırım Menkul Degerler A.S., as domestic manager, and Citigroup Global Markets Limited, as international manager, regarding the recent fully marketed offering of EAS Solutions S.A.R.L. and Logo Teknoloji ve Yatirim A.S.’s shares in Logo Yazilim Sanayi ve Ticaret A.S. EAS and Logo Teknoloji (collectively, the “Selling Shareholders”) were advised by Proskauer Rose in the US and Kolcuoglu Demirkan Kocakli in Turkey.

In total, the Selling Shareholders sold 898,762,300 shares corresponding to 35.95% of Logo Yazilim’s share capital. The sale of shares conducted on the wholesale market of Borsa Istanbul, with the approval of Borsa Istanbul. Shares are sold at the offer price of TL 46 per round of 100 shares.

The deal was led by Esin Attorney Partnership Partner Muhsin Keskin and Baker & McKenzie Partner Mark Devlin, supported by Associates Berk Cin, Ozkan Ozdogan, Serenay Cinki, and Sait Baha Erol, and law clerk Amanda Largent.

Remarking on the matter, Muhsin Keskin commented, “The deal is an example of the resilience of the Turkish market and foreign institutional investors’ confidence in the Turkish capital markets in the aftermath of July’s failed coup attempt.”

The Kolcuoglu Demirkan Kocakli team was led by Partner Umut Kolcuoglu and included Counsel Damla Dogancali and Asli Tamer.

King & Spalding has advised Kuveyt Turk Katilim Bankasi A.S. (“Kuveyt Turk”), currently the largest Turkish participation bank, on the issuance of USD 500 million senior unsecured certificates due 2021.

The certificates are listed on the Irish Stock Exchange and issued through KT Kira Sertifikilari Varlik Kiralama A.S., the Turkish asset leasing company. The transaction was substantially oversubscribed and priced at 5.162%. The issuance attracted more than 115 international investors from the Gulf, Europe, and Asia, with investors from Gulf countries taking up 61% of the offering, European investors subscribing for 27%, and Asian investors taking 12%.

King & Spalding describes the deal as “the most successful international capital markets offering by a Turkish issuer in 2016.”

The King & Spalding team advising Kuveyt Turk was led by Dubai-based Partner Rizwan H Kanji with assistance from Senior Associate Hamed Afzal (Dubai) and transaction specialist Gina Bunker (Washington D.C.).

Moral Law Firm has advised the Gozalan Group on negotiations for its subsidiary, Pera Camis, to obtain the master franchise rights of Camicissima for Turkey. Tonucci & Partners represented Gozalan as Italian Counsels.

Moral describes the Gozalan Group — which operates in the retail industry, among others, both domestically and internationally — as one of the “leading group companies in Turkey.” Camicissima is an Italian clothing manufacturer specializing in shirts.

The Moral team, which also assisted the Gozalan Group with due diligence for the first shop it opened in Nisantasi, Istanbul, consisted of Managing Partner Resat Moral and Attorney Karaca Kacar.

Paksoy is reporting that it has advised GE Healthcare on its entrance into two Public Private Partnership (PPP) projects with GAMA Holding A.S. and Turkerler Insaat A.S. with the Turkish Ministry of Health: The Izmir Bayrakli Integrated Healthcare Campus Project and the Kocaeli Integrated Healthcare Campus Project. The two projects are collectively valued at approximately USD 1.3 billion. White & Case and its Turkish arm, the Cakmak-Gokce Law Offices, and its former associated partner firm in Ankara, the Cakmak Law Offices, represented the Gama Holding-Turkerler Insaat consortium and Freshfields Bruckhaus Deringer and Herguner Bilgen Ozeke advised the lenders on the Izmir project.  

Speaking of the Izmir project, White & Case reports that “Gama Holding – Turkerler Insaat and GE are the shareholders of the joint venture company that has developed and will operate the project, which at 2,060 beds is one of the biggest hospitals in Turkey’s healthcare PPP program.” Financing for the Izmir project was provided by the Overseas Private Investment Corporation (OPIC), the EBRD, and Export Development Canada (EDC). There seems to be some disagreement about the amount of financing involved, as Paksoy is reporting that the lenders “provided financing of approximately USD 668 million,” and White & Case reported that “the Izmir project involves EUR 769.6 million financing.”

The Paksoy team on the two projects was led by Partner Zeynel Tunc, supported by Senior Associate Selin Barlin Aral.

Neither Freshfields nor Herguner Bilgen Ozeke responded to our inquiries on the matter.

Paksoy, working with international counsel Latham & Watkins, has advised ACCO Brands Corporation on its USD 333 million acquisition of Esselte Group Holdings AB from J.W. Childs. Skadden Arps advised the sellers on the deal.

According to Paksoy, ACCO is “one of the world’s largest suppliers of branded school, office, and consumer products and print finishing solutions,” and the Esselte Group is “a leading European office products company and marketer of office and consumer products under the Leitz, Rapid and Esselte brands.”

The closing of the transaction, which is subject to the satisfaction of conditions precedent, is expected to take place in early 2017.   

The Paksoy team advising ACCO Brands on the Turkish law aspects of the transaction was led by Partner Stephanie Beghe Sonmez, supported by Senior Associate Burak Kepkep and Associate Zeynep Toma.

CMS has advised Akbank T.A.S., Turkey’s 4th largest bank, on obtaining a EUR 1.2 billion loan from a group of banks.

According to CMS, “the transaction is a rollover of the syndicated loan that the Akbank had secured last August with a 15 basis point reduction in cost. The facility was provided with the participation of 41 banks from 15 countries at a lower cost despite the volatility in the international markets.”

CMS Partner Mark Segall led the firm’s transaction team.