Turkey: Board Of Directors’ Liability In Crimes Of Smuggling

The increase in the volume of international trade will lead to an increase of the Customs Authority's inspections.

Statistical information compiled as of 31 December 2010 from the offi cial website of the Ministry of Customs and Trade concerning seized goods through smuggling investigations is presented below:

The Customs Authorities are charged with duties to oversee matters such as protection of intellectual property rights, protection of public health, prevention of unfair competition, and protection of cultural heritage. As a consequence, in recent years, import companies are undergoing periodic inspections by the Customs Authorities. Within this framework, determination of liability of board members and their legal representatives is an important issue with respect to the legal perspective of transactions that are made on behalf of their company.

According to Article 317 of the Turkish Commercial Code, a board member has the authority to represent and manage the company. Management and representation duties are to be distributed since this is the best option available according to the provisions of the Articles of Association, and these articles set out how these duties may be best distributed. Authorization of management, representation and administration works, such as customs works, may also be delegated in their entirety, or in part, to the directors. In this manner, individual directors may be recognized, separately, as customs transactions.

Article 38/6 of the Turkish Constitution sets forth that criminal responsibility shall be personal. However, no person shall be held responsible for another person's actions and no punitive sanctions may be imposed upon the legal entities associated therewith. These provisions explain the general principle of law: "Each person shall be liable for his/her own actions." According to this Article, it is a clearly regulated general principle under our Criminal Law provisions that one person's actions shall not cause the liability of another. However, the Customs Authorities sometimes fail to take into consideration this principle, and board members may be held objectively responsible in their capacity as board members, even if they are unaware of the criminal activity. In this respect, in cases where there is strong suspicion of smuggling in importation transactions based on documents related to the transaction, criminal investigations may be initiated against the managers of the company and all of its board members.

This has been criticized in Turkish jurisprudence as well. The Criminal Chamber of the Court of Appeals has emphasized on many occasions that, the basic criminal principle is that no person shall be liable for another's actions. Board members will not be held liable unless the intention to commit a crime exists. The Criminal Chamber of the Supreme Court reiterated this principle through its decision No: 2005/2340 dated 3 May 2005.

With regard to smuggling activities, the related legislation is the Law on Anti-Smuggling No. 5607 and promulgated on 31 March, 2007. This is specifi c legislation, as opposed to more general legislation, and references are made therein to the Turkish Criminal Code and the Turkish Criminal Procedure Code.

The noteworthy provision is Article 3 of the Law on Anti-Smuggling, entitled "Crimes and Misdemeanors" Article 3(1): "Importing a product into Turkey without subjecting it to customs formalities shall be penalized with imprisonment of one to fi ve years and a fi ne of up to ten thousand days. If the product is imported into the country through a location other than the customs gateway, the penalty shall be increased by one-third to one-half of the assessed amount." Article 3(2): "Importing the product to Turkey by using false documentation, and refraining from paying partially/fully the related customs duty, shall have a penalty imposed from one to fi ve years, in addition to a fi ne equivalent of up to ten thousand days."

Moreover, the provisions below hold greater importance when a smuggling act is committed by more than one person: Article 4(2): "If the crimes and misdemeanors stipulated in this Law are committed by three or more persons, the penalty shall be increased by one-half." Article 4(3): If the offenses stipulated in this Law are committed in the context of the activities of a company or to its benefi t, the related security measures shall be ordered." Article 4(5): "If the offenses and misdemeanors stipulated in this Law are committed using false documents, a separate penalty shall be imposed."

Another provision that may affect board members is Article 53 of the Turkish Criminal Code. This Article states that if the perpetrators are convicted and sentenced to imprisonment by the Court, they will not be able to exercise certain rights they have enjoyed, such as being employed in the public sector, exercising political rights, joining labor unions, foundations, organizations, or acting as a merchant in business sectors that are subject to administrative approvals, nor may they be appointed as legal guardians over another person.

As a result, due to the increase in the number of customs authorities and customs investigations being conducted, especially in criminal processes that require directors to be brought to task by customs authorities and prosecutors, care must be given especially on fi nancial matters and the tracking of customs transactions, and concerted and diligent effort should be exerted towards the safe maintenance of documents and information.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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