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The Bayegan group: Turkey’s dream couple or another Recep Erdoğan-like nightmare?

Yurtgaz, which is one of the largest Liquid Propane Gas (LPG) distributors in Turkey, requested for a ruling for two of its companies to avoid bankruptcy leading to criminal charges against one of Turkey’s notorious power couple and their escape flight to Dubai.

Ankara/Dubai (11 October – 30).

The story of Yurtgaz and the Bayegans, one of Turkey’s high profile power couple’s, rise and fall reads like a Cinderella story. Rüya Bayegan, a 38-year-old graduate from Newbury College in Boston joined her father’s textile business and then striked out on her own and joined Bayegan in 2002.  

Bayegan, formed in 1945, is one of the oldest actors in the petrochemical industry in Turkey. Public records speak of a solid family business and reads like a page out of the Forbes magazine. With 24 offices worldwide and 200 more employees, Bayegan in real terms is medium size player. According to Refining & Petrochemicals, Rüya Bayegan oversaw the expansion of the family business by creating a global distribution network and logistics capability around the globe. With their headquarters in Turkey, the Bayegans partnered and ventured with companies like Chevron, Ineos, Tasnee, Evonik to name a few.

With such international presence and recognition with spot-on business acumen, there’s no question of who is Rüya and her husband, Ercüment Bayegan.

However, the stellar rise of power is overshadowed and dampened by criminal investigations by the Turkish government against Rüya and Ercüment Bayegan for a slur of criminal offenses.

Records filed at the Turkeys Criminal Enforcement courts showed the couple accused of a series of forgeries of documents, unpaid million-dollar debts with factoring companies across Istanbul, fake addresses to evade judiciary inquiries, changing of company titles, and tax evasion.

“Mal Kaçırma”: the hidden assets of the Bayegans 

Informed insiders claimed that the couple, Rüya and Ercüment Bayegan fled for Dubai to avoid prosecution by the Turkish goevernment. Investigators suspected that Rüya Bayegan, a Turkish national by birth, allegedly holds a Serbian passport which further frustrates the search efforts by the Turkish police. This provided Rüya Bayegan with the another back-door entry into Europe while avoiding detection by the Turkish law.

The Turkish lawsuit against Rüya Bayegan was triggered by and a result of the numerous claims against the couple’s subsidiaries of Yenigurt Petrol Terminal AŞ and its Liquid Propane Gas (LPG) facility in Hatay Erzin. Sources close to the Bayegans suggested their move to Dubai was to avoid arrest.

According to corruption experts, Dubai is increasingly fast becoming the capital of illicit money flows. Awash with the ‘funny money’ as one expert called it, the city-state hosts organized crime figures such as the Russian oligarchs escaping the sanctions and criminals wanted by Interpol.

The changes in laws in Europe, such as greater collaboration between the EU police bodies, active and enhanced legislation against corruption and the newly adopted European Whistleblowing Directive (EU WBD) which was once also applies to Turkey, will see an increase of members of the public coming forward willingly and enthusiastically with information about crime, corruption and collusion.

Records in the Criminal Enforcement courts in Turkey, amongst others in Ankara, Hayat, Istanbul and Konya, showed that Rüya Bayegan and her husband Ercüment are charged with fraud. Officials lament that the couple have no official residence or address, eventhough they live in Turkey. Unfortunately, records also show that their residential addresses in Dubai are beyond the judicial reach of Turkish courts and investigators.

The lawsuits filed against Rüya and Ercüment Bayegan are of a combination of charges, stemming from their obvious attempts to evade judicial laws by changing their companies’ titles in order to avoid enforcement by the authorities and colluding to defraud the creditors.

Factoring fraud

Over the years, Rüya and Ercüment Bayegan have attracted the attention of Turkish officials of financial crime. Lending-against-service contracts is a common business practice in Turkey, also a tactic used by Rüya and Ercüment Bayegan when the vendors pay on time. If they do not, a knock-on effect of poor capitalization kills the small businesses which very much dependent on the income. Often the operating profit of these businesses will cut close to zero. A default of payment by Bayegan is disastrous for the small business owners who do not get bank support.

Yurtgaz officials claimed they were heavily indebted to the Bayegan group. This is mainy due to factoring service companies underwriting the risk for middlemen contractors and approach the Bayegan’s directly to settle the debt. The lenders then found out that the Bayegan companies changed their business titles. Further suspicions grew and lawsuits were filed against four individuals and companies including Ercüment Cafer Bayegan, the owner of Bayegan Petrol, where they were accused of not paying millions of Turkish Liras.

One of the creditors from Yurtgaz claimed “the defendants colluded and smuggled goods” and evaded tax. Ercüment Bayegan, one of the many defendants, faces up to 3 years in prison and financial restitution.

The lawsuit also named Ercüment Cafer Bayegan, Ömer Gümüş and Byport Petrol Ürünleri Terminal Hizmetleri A.

The dispute centers on an outstanding debt by Yeniyurt Petrol Terminal AS located in Hatay, of an estimated 47.5 million US dollars as part of a sale of the LPG facility further triggered a crisis blaming the Bayegan businesses.

Court documents in Hatay and Istanbul show that Bayegan did not pay for the facility it bought on behalf of Byport Petrol Ürünleri Terminal Hizmetleri AŞ. 

The sales was negotiated by Mutlu Gül, the former General Manager of Turkish Petroleum, but turned into a non-payment crisis when the outstanding payment was not made thus defaulting deal. Yurtgaz further claimed that the contract was not signed by Bayegan’s boss, Ercüment Bayegan and the deal was non-binding and later cancelled by Yurtgaz at the Üsküdar 17th Notary Public.

Another lawsuit was filed by the plaintiff İrfan Güzel, a creditor from Yenigurt Petrol. Güzel claimed the defendants colluded jointly aiming to injure the creditors. According to the case files, the debtor company gave a 15 million Lira promissory note to Güzel. However a day after the deed was issued, the giant plant was transferred to Bayegan’s company driving Yurtgaz . This act was done maliciously and intentionally pathed the company into insolvency.

Another creditor filed a lawsuit against another Bayegan company, Byport Petrol Ürünleri Terminal Hizmetleri AŞ. The plaintiff, Menduh Yürekli appeared as a creditor who borrowed 11.2 million Liras against Bayegan. Based on investigations done, documents showed that the Bayegan has no receivables pertaining to this business hence it then defaults the lender.

With the legal troubles looming over the Bayegan, investing in the company is a high-risk gamble despite the large market share with 10 percent of polymer distribution in Turkey and 20 percent in solvents.

Experts suggest the unwritten consequence and liabilities of the high powered couple impacts the livelihood and businesses of about 500 gas stations and a loss of 1,500 jobs across Turkey.

Big plans, big loss, or malicious fraud?

The couple divides their tasks, job scope and involvement in issues in the organization as separate roles from each other. Of course, the company rules were set out by the Bayegans. As one interview reads that, “Her husband Ercüment Bayegan sets the vision and goals, and Rüya Bayegan has to run to reach those goals.” If this division of labor/roles makes Rüya Bayegan an accomplice, such decision is yet to emerge.

In 2019, Rüya and Ercüment Bayegan’s world was different. In an interview, Rüya shared her big plans. Amongst her many schemes, for one she aimed to partner up with a foreign investor to establish a refinery in the South of Turkey was one of such schemes.

Rüya Bayegan wined and dined with the who is who of the petrochemical industry. In the book titled ‘Leaders of the Middle East’, she claimed to have fortunes. 

Rüya Bayegan said, “With me in this book is Yogesh Mehta, Chairman of Petrochem, Ahmed Al Arbeed, CEO of Dana as, Arnaud Breuillac, Vice President of Total, Abdullah Saeed Al Suwaidi, NDCCEO, Mark Carne, Shell Regional Chairman, and Abdulaziz Al Judami, Director of Saudi Aramco. I am known by the 7 most influential names.”, she was quoted. Insiders close to the Bayegans said, “Modesty seems not necessarily a personal quality”.

Without doubt, Rüya and Ercüment Bayegan counted on the change of fortunes in Turkey. Tension with the United States, the country’s strategic interest to be an oil bridge to Russia and the Middle East and the war in Europe has dire consequences for Turkey. This particularly affects Greece too, which faces Turkish saber on-going rattling over the control of the Mediterranean Sea.

Sensing an opportunity, the quick rich scheme adopted by this notorious couple is highly impacting the Rüya and Ercüment Bayegan dynasty. If the bubble bursts at the expense of employees, contractors, and families, it will be one of the biggest corporate scandals of the Erdoğan administration.