Constitutionality Review

A. Transfer of surplus revenues, resources and assets in possession of the State institutions and organizations to the Turkey Wealth Fund or management of these by the Company shall be decided by “the Council of Ministers”

Grounds for the request for annulment

In the petition, it is maintained that the provision aims at engaging in portfolio management by liquidating the State assets, that these provisions do not serve the public interest, that the limits of the power delegated to the Council of Ministers has not been set, and therefore, it is unclear, that the resources to be collected and used amount to a secondary public financing pool (the secondary treasury) in the budget and public financial system, and that conferring this authority upon the Council of Ministers contravenes the budgetary right of the Parliament and the relevant constitutional provisions. In this respect, it has been argued that the provision in question is incompatible with Articles 2, 6, 7, 8, 87, 161 and 163 of the Constitution.

Provision requested to be annulled

Article 4 § 1 (b) of the Law provides that among the surplus revenues, resources and assets in possession of the State institutions and organizations, those decided “by the Council of Ministers” to be transferred to the Turkey Wealth Fund or to be managed by the Company shall be among the resources of the Fund. The phrase “…by the Council of Ministers…” set forth therein is the provision requested to be annulled.  

The Court’s Assessment

Assessments of the Constitutional Court regarding these allegations are briefly as follows:

The contested rule empowers the Council of Ministers to decide on the transfer of surplus revenues, resources and assets in possession of the State institutions and organizations to the Turkey Wealth Fund in order to provide resource and financing for the Turkey Wealth Fund and the Company in the fastest manner.

Surplus revenues, resources and assets in possession of the State institutions and organizations are not needed for carrying out their main activities and services as set forth in their legislations. There is no doubt that the rule is intended on the one hand to make a contribution to the economy with surplus revenues, resources and assets in possession of the State institutions and organizations, and on the other hand to enable the Turkey Wealth Fund to gain strength in terms of resources and financing, thereby taking a more effective role in achieving the purposes desired.

In addition, the decisions to be taken by the Council of Ministers in accordance with the contested provision shall be subject to the audit of the administrative jurisdiction. Furthermore, regard being had to the fact that Article 6 of the Law stipulates a three-stage audit for the Company, sub-companies and sub-funds established pursuant to Law no. 6741, the public resources within this scope will not go without inspection.

The redundant revenues, resources and assets in possession of the State institutions and organizations may change depending on time and the economic, social and strategic situation and conditions of the country. As it is understood, upon determining basic rules, the legislator has conferred authority to make decisions to the executive body, in accordance with the changing situations and conditions. Therefore, because the contested rule determines basic rules and sets the limits of powers conferred upon the executive to make decisions on transfer or management of the revenues, resources and assets, it cannot be considered to be vague or in contradiction of the principle of non-transferability of legislative powers.

The issues that cannot be regulated with budgetary legislation are set forth in Article 161 of the Constitution. The fact that application of a provision will result in income or expenditure does not necessarily mean that the provision relates to the budget. The budgetary legislation regulates the appropriation amount allocated to the relevant institutions for the year and the expenditure procedures and principles; however, it cannot be said that all general and abstract rules concerning appropriations are related to the budget. In this scope, the provisions pertaining to the rules concerning the disbursement or transfer of the appropriations allocated to the public institutions by budget cannot be considered to relate to the budget, and there is no constitutional obstacle for these issues to be regulated by non-budgetary law. Therefore, as the contested provision does not directly relate to the budget within the meaning of Article 161 of the Constitution, it does not contravene the provisions of the Constitution concerning the budget.

Consequently, the Court dismissed the annulment request as it found no violation of the Constitution.

B- Non-application of the provisions of the Law on the Court of Accounts, dated 3 December 2010 and numbered 6085, to the Turkey Wealth Fund, the Company, the Sub-funds and Sub-companies  

Grounds for the request for annulment

In the petition, it is maintained that the Company to be established by Article 6 of the Law, the other companies to be established by the Company, the Turkey Wealth Fund and the sub-funds affiliated to it must be audited by the Grand National Assembly of Turkey (“the GNAT”) as they are established completely with the public assets and resources, that the auditing authority on behalf of the GNAT has been granted to the Court of Accounts by the Constitution, therefore, the Turkey Wealth Fund must be audited by the Court of Accounts; and that the audit procedure prescribed by the Law with respect to the Fund has no relevancy with the audits set forth in Articles 160 and 165 of the Constitution. In this respect, it has been argued that the provision in question is incompatible with Articles 2 and 160 of the Constitution.

Provision requested to be annulled

The contested rule sets forth that the provisions of the Law on the Court of Accounts, dated 3 December 2010 and numbered 6085, shall not be applied with respect to the Turkish Wealth Fund, the Company, the sub-funds and the other companies established by the Company.

The Court’s Assessment

Assessments of the Constitutional Court regarding these allegations are briefly as follows:

As it is understood, the Turkey Wealth Fund and the Company have significant financial and structural objectives and expectations, and, therefore, it has been granted a special status with exemptions and exceptions in many regards. They are subject to the provisions of the Turkish Commercial Code no. 6102, but they are not in the form of public corporation. A special procedure has been adopted for Turkey Wealth Fund and the Company in order to ensure the speed and manoeuvre abilities required by the market economy in achieving the objectives and expectations. In this context, the Fund, the Company, the sub-funds and the other companies to be established by the Company are not among the public administrations and the social security institutions using the central government budget that shall be audited by the Court of Accounts in accordance with Article 160 of the Constitution. In addition, the audit of those funds and companies have not been assigned to the Court of Accounts, as this decision remains within the discretionary power of the legislation. Furthermore, given the fact that the Fund and the Company in question do not receive a direct fund transfer from the general budget, the contested provision, which provides that the Law no. 6085 on the Court of Accounts shall not be applicable for the Turkey Wealth Fund, the Company, the sub-funds and the other companies established with a special status, does not violate Article 160 of the Constitution.

Article 6 of Law no. 6741 headed “Audit” provides that the Company, the other companies to be established by the Company, the Turkey Wealth Fund and the sub-funds to be established within the Turkey Wealth Fund are subject to independent audit, that the Company will comply with the institutional management regulations within the scope of the Capital Market Law no. 6362, that the independently audited annual financial statements and operations of the Company, the other companies to be established by the Company, the Turkey Wealth Fund and the sub-funds shall be audited by at least three central audit personnel assigned by the Prime Minister, who are experts in the fields of capital markets, finance, economy, treasury, banking and development, pursuant to the independent audit standards, that the report to be drafted as a result of the audit shall be presented to the Council of Ministers annually by the end of June, that the financial statements and operations of the Company, the other companies to be established by the Company, the Turkey Wealth Fund and the sub-funds in the previous year shall be audited each year in October, based on the audit reports drafted by the Planning and Budget Commission of the Grand National Assembly of Turkey within the scope of Article 6 §§ 1 and 2 of Law no. 6741.

As it is understood, the audit in question is assigned to the Grand National Assembly of Turkey with respect to the Turkey Wealth Fund and the sub-funds. In this respect, the principles pertaining to the audit to be carried out by the Grand National Assembly of Turkey, as set forth in Article 165 of the Constitution, shall be regulated by law.

Furthermore, certain provisions of the Capital Market Law no. 6362, being in the first place Article 14 therein, contain detailed regulations concerning independent audit. Pursuant to Article 6 of Law no. 6741, the Company will comply with the institutional management regulations in this scope. Accordingly, as Law no. 6741 and the other relevant laws contain detailed regulations regarding multi-faceted and effective audit of the Fund, the Company, the sub-funds and the other companies to be established by the Company that have been excluded from the audit of the Court of Accounts in accordance with the contested provision, it cannot be said that they shall not be subject to audit or that the audit in question is insufficient. In addition, pursuant to Article 160 of the Constitution, it is at the discretion of the legislator to assign audit duty to the Court of Accounts and determine the scope of the audit. In this context, the fact that the legislator has stipulated an audit procedure other than the audit by the Court of Accounts with respect to the Fund, the Company, the sub-funds and the other companies to be established by the Company does not violate Article 2 of the Constitution.

Consequently, the Court dismissed the annulment request as it found no violation of the Constitution.