The Istanbul Chief Public Prosecutor's Office has completed its investigation into Istanbul Gold Refinery (IAR) Inc. and related companies, alleging that 44 suspects — officials of these companies — fraudulently obtained state subsidies in an organised scheme that caused public loss. The indictment names 31 companies including IAR Inc. as "financially liable" and 44 individuals as "suspects," including IAR owner Özcan Halaç. The state is alleged to have suffered a $12,537,560 loss.
According to the indictment, the Central Bank of Türkiye (TCMB) issued an implementation directive under its "Communiqué on Support for the Conversion of Companies' Foreign-Origin Foreign Currency into Turkish Lira," granting exporters a 3% subsidy on foreign-currency receipts. The suspects allegedly imported gold ore through legally registered companies, melted it at domestic gold furnaces, and then mixed the melted gold with acid solutions to present it as "processed."
The resulting precious-metal components were then legally exported, generating foreign-currency revenue on which the 3% state subsidy was claimed. The investigation found that owners and managers of IAR Inc., Gram Altın Precious Metals Refinery, Kuyumcukent Energy Production and Operation, Istanbul Silver Refinery, and IAR Precious Metal Technology set up new companies under the names of their own managers and employees. Colloidal gold purportedly purchased from these shell companies was exported to Halaç's Dubai-based company, Fine Gold.
From a supply-chain perspective, this case will have consequences on two fronts: (1) tighter scrutiny of precious-metal value-add chains in export-based subsidy mechanisms — particularly the customs tariff classification boundary between "gold component" and "raw gold" will be redrawn; (2) shell-network structures that book FX-earning exports on paper without real production flow now carry blacklist risk in both TCMB subsidy applications and FATF compliance audits — legitimate gold exporters will face increased certification and chain-of-custody documentation requirements.
Key Takeaways:
1. Istanbul Gold Refinery probe: 44 suspects, 31 companies financially liable, $12.5M public loss.
2. Scheme: import gold ore, melt + acid-mix to present as 'processed gold,' export, claim 3% subsidy.
3. Exports were directed to Halaç's Dubai-based Fine Gold company.
4. Shell companies set up after the 15 October 2024 TCMB directive change.
5. Side effect: increased chain-of-custody documentation burden for gold exporters.
