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State media reports that Turkey has detained 21 suspects as part of the investigation into the Istanbul Gold Refinery.

Anadolu, the state-owned news agency, reported on Monday that Turkish police had detained 21 individuals linked to the Istanbul Gold Refinery as well as related companies for allegedly obtaining support from the state through fraudulent means.

Anadolu reported that police conducted simultaneous raids in a dozen different areas across the city, after Istanbul prosecutors had issued arrest warrants. Two more suspects are still on the run.

According to data from Turkey's official Trade Registry, the Istanbul Gold Refinery is owned by Halac and is one of London Bullion Market Association's (LBMA) accredited refineries.

Anadolu quoted a statement from the Istanbul chief prosecutor that IAR officials including main shareholder Ozcan Halac set up companies in order to receive a state subsidy of 3% on $543.6 millions worth of exports. This led to a loss to state of $12.5 million.

Anadolu reported that an investigation revealed the refinery received a 3% state subsidy for selling foreign currencies to the central banks in exchange for Turkish lira under a scheme of incentives designed to support the Turkish lira.

The suspects were said to have imported gold first, then processed it at home and exported it once more in order to generate forex.

Halac and the IAR could not be immediately reached for comment.

The suspects are accused of violating a central bank law, public finance laws and a law relating to the protection of lira value. Can Sezer, Daren Butler, and Ed Osmond edited the report.

(source: Reuters)