The Offense of Fraudulent and Reckless Bankruptcy in Turkish Penal Law – Av. Lider Tanrıkulu

ABSTRACT

Even though the matter of reckless and fraudulent bankruptcy has been referred to in the clauses no. 161 and 162 of the Turkish Penal Law No. 5237, the matter which must be clarified in the first place is the concept of bankruptcy itself. Bankruptcy means going financially bankrupt and being unable to pay debts. In a commercial sense, a tradesperson who cannot pay his/her debts is considered to have gone bankrupt if it has been determined by a court that he/she cannot is unable to pay debts.

In a legal sense, bankruptcy can be described as the inability to pay debts. In a broader sense, there is a special reason for the capital companies and cooperatives to go bankrupt; being unable to meet the debts with the money owed to the company or the company’s property. In such a situation, it is decided the tradesperson/entity has gone bankrupt and a bankrupt’s estate is established. Sometimes the bankrupt tradesperson may act in a fraudulent and reckless manner so as to prevent his/her property from falling under the jurisdiction of the bankrupt’s estate. For such a case, the Turkish Penal Law presented some regulations with the 10th article of the title “Crimes Against Property” under the main title “Crimes Against Individuals.”

A. MAIN ISSUES
In accordance with the article no. 161 of the Turkish Penal Law No. 5237, a person who acts in a fraudulent manner so as to deceitfully prevent his/her property being lost to bankruptcy, is punishable with 3 to 8 years of prison sentence if a bankruptcy occurred before or after such fraudulent actions. For a bankruptcy to be considered fraudulent, these conditions are to be met:
a) The person/entity who is in debt discards or conceals the property which stands as an insurance for what is owed to the creditors or the person in debt diminishes the value of such property,
b) The concealment or the destruction of books, records or documents so as to prevent the property from being lost due to bankruptcy,
c) The forgery of documents which makes it look like the person/entity in more debt,
d) The forgery of fake accounting or budget documents to make it look like the person/entity in question owns less.
The article no. 162 of the same law dictates that a tradesperson is punishable with 2 months to a year of prison sentence if that person is proved to have caused the bankruptcy due to reckless his/her actions, thus determining the extents of “reckless bankruptcy”.
The difference between these two articles concerns the moral element of the crime.
If we are to compare the old law, no. 765, with the new law, no. 5237, it can be said that the old law did not refer to how this crime is committed. The new law, no. 5327, refers to the ways in which this crime can be committed.

B. THE PROTECTED LEGAL INTEREST
The legal interest which is related to the crime of reckless or fraudulent bankruptcy is to protect the creditor from being subject to harm. The preservation of the economic order is aimed to be achieved through the protection of the property of the creditor or the property which is to be given to the creditor for the debts. Another reason for the existence of regulations concerning this matter is based on the principle of mutual trust between the creditor and the person in debt in commercial life. This issue has also been referred in international law and aims to maintain the development of commercial life and to contribute to it by preserving the economic structure of societies. Even though some have claimed that prison sentences concerning issues related to money is unconstitutional, the Court of Constitution did not object to the prison sentences, focusing on the social and economic interest.

C. THE SUBJECT-MATTER OF THE CRIME/OFFENSE
The subject-matter of the fraudulent and reckless bankruptcy crimes are categorized under two categories: material and legal. The material element of both crimes is the property/goods which stands as the insurance for what is owed to the creditor. The legal subject-matter of both crimes is the same with the protected legal interest; to protect the rights of the creditor and to maintain the balance of the economic system by establishing commercial relations based on mutual trust. According to the verdict no. 2019/27075 E., 2020/37 K., dated 06.01.2020, of the Penal Department No. 8 of the Supreme Court, “the determination of bankruptcy is an objective condition for the existence of the crime and there needs to be a copy of the preamble, certifying the absolute existence of the bankruptcy, for the tradesperson to be punished

D. THE OFFENDER/PERPETRATOR
This issue is controversial in the doctrine and there are two opinions:
According to the popular opinion, with which we agree, the offender of the crime of fraudulent bankruptcy is the person who is in debt, who tries to prevent losing his/her property due to bankruptcy by resorting to fraudulent actions to get rid of the debt. As in this case, only the tradespersons/trade entities can be the offending side of this crime and, therefore, this crime is a peculiar crime by its characteristic features. Many crimes can be committed by any person, whereas peculiar crimes can only be committed by a peculiar type of person/entity. With all that clarified, it can be said that the offender/perpetrator of the crime of fraudulent bankruptcy is the tradesperson/trade entity which is in debt. The Turkish Trade Act categorizes the tradesperson under two articles. The article no. 12 of the Turkish Trade Act defines the tradesperson/entity and those who have the same responsibilities of a tradesperson/entity as follows:
-A person/entity who runs a commercial business, may it be only partially.
– A person/entity who has announced through circular publications, newspapers, radio television and other media and who has completed the process of registry through trade registry, is a tradesperson/trading entity even if the commercial has not yet started.
– A person who is or acts like a partner to a commercial company, even if that company does not legally exist, is to be held responsible for his/her actions against third parties who were not fully aware of the nature of the connection of the said person with the company.
The legal entities are described in the article no. 16 of the same law as follows:
-The foundations which deal with commercial companies to fulfil their own goals and institutions which are founded by the states, city administration offices, municipalities or other public institutions for specific legal or commercial purposes are considered to be trading entities.
-The public legal entities such as city administration offices, municipalities and local administrative offices and foundations which use more than %50 of their income for public expenses are not considered trading entities, even if they do not manage the business establishment directly, but manage it through another legal entity which is managed in accordance with public law.
All this considered, it can be said that the crime of fraudulent bankruptcy, which is described in the Turkish Penal Law, is a peculiar crime in terms of its offender/perpetrator.
According to another opinion (presented by Prof. Dr. Özgenç), the offender/perpetrator of this crime does not have to be a tradesperson/trading legal entity. From this point of view the person who is going to be legally responsible for this crime and the person who has caused the bankruptcy and acted in fraudulent manner may not be the same. Yet, we must state that we do not agree with this point of view. We think that, considering the article no. 162 of the Turkish Penal Law, which suggests that the offender is responsible for not displaying the sense of responsibility and care a tradesperson/entity should have displayed, the offender/perpetrator of this crime can only be the tradesperson/entity, making it a peculiar crime in terms of its offender.
E. VICTIM
The victim of the crimes of fraudulent and/or reckless bankruptcy is the person/creditor who could not collect the debts owed to him/her or was exposed to the risk of being unable to collect the debts.

F. THE MATERIAL ELEMENT OF THE CRIME/OFFENSE
1.MOTIVE
The crime is considered to be committed if the element of motive if fulfilled. The element of motive is considered to be in effect with the realisation of one of the four actions stated below:
a) The person/entity who is in debt discards or conceals the property which stands as an insurance for what is owed to the creditors or the person in debt diminishes the value of such property,
b) The concealment or the destruction of books, records or documents so as to prevent the property from being lost due to bankruptcy,
c) The forgery of documents which makes it look like the person/entity in more debt,
d) The forgery of fake accounting or budget documents to make it look like the person/entity in question owns less.
Even one of these actions is enough to make a person/entity responsible for the crime of fraudulent bankruptcy.

Another matter which must be clarified about the crime of fraudulent bankruptcy is the time of the commitment of the crime. Before we go any further, it must be stated that this crime/offense is an inchoate offense. Therefore, the realisation of one of the actions above is enough for the commitment of this crime/offense. The ruling for a bankruptcy is the condition of objective punishment. The condition of objective punishment is formed after the commitment of the crime and does not concern the will of the parties. If one of the fraudulent actions mentioned above was displayed after the beginning of the bankruptcy process but before the end of the bankruptcy process (which is another way in which this crime may be committed), there will not be a condition of objective punishment; the condition for objective punishment is formed after the completion of the offense/crime.

According to the point of view which claims that the crime is an inchoate offense/crime, the creditor does not have to come under any harm for the crime/offense to be considered complete. An attempt or incomplete actions are not enough for a person’s/entity’s punishment for crimes for which an objective punishment condition is necessary. For this reason, there needs to be an objective punishment condition (a ruling for a bankruptcy) for the person/entity to be punished.

The crime/offense of reckless bankruptcy is considered to be committed when the responsible tradesperson/entity neglects the responsibilities of being careful and cautious. There are no exact boundaries set by the law about this matter. Article no.310 of the Bankruptcy and Enforcement Law is to be taken as a reference for evaluations about this matter. The crime/offense of reckless bankruptcy is n inchoate offense. According to the preamble of the article, the person/entity can be punished even if the creditor did not come under any harm.
2. RESULT
As explained above, the crimes/offenses of fraudulent and reckless bankruptcy are inchoate offenses. Therefore, it is not expected for the creditor to be subject to harm because of the offender’s actions.

3. CAUSAL RELATION
There can be no expectation for the existence of a causal relation, as it is not necessary for the creditor to be subject to harm because of the offender’s actions for there to be a punishment.

G. THE MORAL ELEMENT OF THE CRIME/OFFENSE
The offense/crime of fraudulent bankruptcy can only be committed deliberately. The perpetrator has to try to decrease his/her property and has to commit one of the actions stated above deliberately to be accused of this crime. The Penal Department No. 8 of the Supreme Court has stated with its verdicts no. 2018/7884 E. and 2019/847 K., dated 17.01.2019, that:
“It is against to law to make a written decision with an incomplete investigation, the article no. 161/1-b of the Turkish Penal Law no. 5237 states that “the commercial/trade records and books are important for the case only if there have been fraudulent alterations made on them, the tradesperson (or entity) shall not be punished if he/she refuses to give the records, documents and books if there are no fraudulent actions and the person/entity may be held responsible of destroying such documents only if it is to conceal the fraudulent actions and alterations concerning the offense and therefore it is necessary to: first find out if there have been any records in the first place, to send accountants and experts to investigate the records and the books in the presence of a notary public to verify the validity of the defence of the suspects, to carry out investigations concerning the trade records and books through the trade registry offices, to carry out an investigation with a group of experts consisting of a Financial Observer/Accountant and an academic who has specialized in the field of Commercial, Enforcement and Bankruptcy Law to check if any actions against the articles no. 161 and/or 162 were taken.”
According to the Rulings of the Turkish Penal Law, the crime/offense of reckless bankruptcy is considered to be committed when the tradesperson/entity does not show the necessary care and caution.

H. THE PECULIAR MANIFESTATIONS OF THE CRIME/OFFENSE

1. THE ATTEMPT
Since the articles about this crime have been regulated within the context of objective punishment conditions, the existence of the concept of attempt is possible concerning this offense/crime. The tradesperson/entity can be punished if the objective punishment condition is realised.
The offense/crime of reckless bankruptcy is committed, as the name suggests, by carelessness and therefore it would not be logical to mention the concept of an attempt in such a case.
2. PARTICIPATION
Fraudulent bankruptcy, as it has been mentioned before, is a peculiar offense. As the offender/perpetrator can only be a tradesperson/entity, participation of a party which does not have a commercial connection does not seem possible. Yet, it is possible for a person to be held responsible for motivating the offender to commit this crime.
Since participation is not possible for crimes committed out of recklessness, it is not possible for there to be a participant concerning the offense/crime of reckless bankruptcy.
3. CONSEIL
a) Combined Offense
There have been no regulations about this concerning the crimes/offenses of fraudulent or reckless bankruptcy.
b) Successive Offense
It is possible for the offense of fraudulent bankruptcy and not possible for the offense of reckless bankruptcy.
c) Conceptual Aggregation
Within the context of common-special norms, the offense of fraudulent bankruptcy falls under the category of special norms, making it not possible to talk about conceptual aggregation.
It is also not possible to talk about conceptual aggregation concerning the offense of reckless bankruptcy.

d) Factual Aggregation
The commitment of one of the actions stated earlier is enough for the punishment for the offense of fraudulent bankruptcy. Even though some claim in the doctrine that forgery of documents, which is a part of this offense, should be another cause for punishment on its own, some think that it is not possible to punish the same person/entity for both crimes at once, as the forgery documents is one of the ways in which this crime can be committed and it is not legally possible to punish the same person twice at once for the same crime. For the offender to be punished for document forgery, there needs to be another crime/offense for which the act of forgery was performed.

I. PERSONAL IMPUNITY OR CAUSES OF REMISSION
These will be in effect in accordance with the article no. 167 of the Turkish Penal Law.

J. EFFECTIVE REMORSE LAW
The rulings about the Effective Remorse Law concerning the offenses of fraudulent and reckless bankruptcy were regulated in the article no.168 of the Turkish Penal Law:
If the offender, the helper or the motivator of the offense shows remorse after the offensive actions have been taken but before the investigation has started and tries to undo the harm done the creditor, the punishment will be reduced by 2/3 of its original form. If the investigation has started, the punishment will be reduced by half.
It must be stated that the consent of the victim is obligatory for the application of the Effective Remorse Law in such cases.

K. THE AUTHORIZED AND THE RESPONSIBLE COURTS
The heavy penal courts are responsible for the offense/crime of fraudulent bankruptcy.
Penal courts of first instance are responsible for the offense/crime of reckless bankruptcy.
According to the Law on Criminal Procedure, the court in the location in which the crimes were committed will be authorized.
A complaint is not necessary for the initiation of prosecution and investigation and these will be carried out in an ex officio manner.

Lawyer ÜNSAL BENER

BIBLIOGRAPHY
– Dr. Haluk Çolak, İcra ve İflas Suçları ile Uygulamada Karşılaşılan Sorunlar, Bilge Yayınevi 2005 (Problems of Application Concerning Enforcement and Bankruptcy Laws, 2005)
– Marmara Üniversitesi Hukuk Fakültesi Hukuk Araştırmaları Dergisi Cilt 24, Sayı 2, Aralık 2018, (University of Marmara, Faculty of Law, Journal of Legal Studies, Volume 24, Issue 2, December 2018)
– Ankara Üniversitesi Hukuk Fakültesi Dergisi, Cilt 65, Sayı 4 – 2016 (Journal of Faculty of Law, Volume 65, Issue 4)
– Baki Kuru, İcra ve İflas Hukuku, Yetkin Yayınları, Ekim 2019 (Enforcement and Bankruptcy Law, October 2019)
– Talih Uyar, İcra ve İflas Hukuku Rehberi, Bilge Yayınevi-2015 Baskı (A Guide to Enforcement and Bankruptcy Law, 2015)
We thank our colleague Lawyer Ünsal BENER for writing this article, sharing it with us and allowing us to publish it.

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