Turkey earthquake: 130 contractors face arrest over building code breaches

Follow the latest news on the earthquake in Turkey and Syria

Turkey has issued warrants for the arrest of 130 people over breaches of safety codes they say caused unnecessary deaths, six days after a 7.8-magnitude earthquake shook the southern part of the country.

The quake levelled at thousands of buildings in Turkey and Syria, with the death toll exceeding 35,000 on Monday.

Turkish Vice President Fuat Oktay confirmed the arrest warrants on Sunday, and police said at least 12 people had been arrested.

Last week, Turkey’s Minister of Justice Bekir Bozdag said “those who have been negligent, at fault and [are] responsible for the destruction following the earthquake will answer to justice”.

Safety guidelines for projects in earthquake-prone areas have been in place in Turkey for about two decades but experts say they have rarely been enforced.

Among those facing scrutiny were two people arrested in Gaziantep province on suspicion of cutting down columns to make extra room in a building that collapsed, the state-run Anadolu Agency said.

Three people were arrested, seven others were detained and another seven were barred from leaving Turkey, the Justice Ministry said.

Two contractors suspected of ignoring building standards in Adiyaman were arrested on Sunday at Istanbul Airport while trying to leave the country, the private DHA news agency and other media reported.

One detained contractor, Yavuz Karakus, told DHA: “My conscience is clear. I built 44 buildings. Four of them were demolished. I did everything according to the rules.”

Eyup Muhcu, the president of the Chamber of Architects of Turkey, told AFP last week that many buildings near the epicentre of the disaster had been hastily erected with “weak and not sturdy” construction.

The Turkish government is now racing to evaluate which buildings collapsed as a result of negligence by contractors.

Authorities at Istanbul Airport on Sunday detained two contractors held responsible for the collapse of several buildings in Adiyaman, the private DHA news agency and other media reported. The pair were reportedly on their way to Georgia.

Two more people were arrested in Gaziantep, accused of removing columns to make extra room in a building that collapsed, the state-run Anadolu Agency said.

Turkey’s Justice Ministry has announced the planned establishment of Earthquake Crimes Investigation bureaus, which will seek to identify contractors and others behind substandard constructions.

The bureaus will gather evidence, instruct experts including architects, geologists and engineers, and check building permits and occupation permits.

A building contractor was detained by authorities on Friday at Istanbul airport before he could board a flight out of the country.

He was the contractor behind a luxury 12-storey building in the historic city of Antakya, in Hatay province, which collapsed, causing many deaths.

Meanwhile, Hatay’s airport reopened early on Monday after its runway was repaired, allowing military and commercial planes to ferry in supplies and fly out evacuees.

The arrest warrants could help to direct public anger towards builders and contractors, deflecting attention away from local and state officials who allowed the apparently substandard constructions to go ahead.

Turkish President Recep Tayyip Erdogan's government, already burdened by an economic downturn and high inflation, faces parliamentary and presidential elections in May.

Survivors, many of whom have lost loved ones, have directed their frustration and anger at authorities.

Rescue crews have been overwhelmed by the widespread damage which has affected roads and airports, making it even more difficult in the race against the clock to rescue people.

Mr Erdogan acknowledged earlier in the week that the initial response has been hampered by the extensive damage.

He said the worst-affected area was 500km in diameter and home to 13.5 million people in Turkey.

During a tour of quake-damaged cities Saturday, Mr Erdogan said a disaster of this scope was rare, and again referred to it as the “disaster of the century”.

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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