A corruption investigation has shaken Turkish political and business life with the detention of prominent executives and people close to the government amid a deepening feud within the ranks of a country’s religious conservatives.

In a series of early morning raids on Tuesday, the sons of three cabinet ministers, the mayor of a ruling party stronghold in Istanbul, and a number of government advisers were taken into police custody.

Also questioned were Suleyman Aslan, head of the state-controlled Halkbank, which is Turkey’s main financial intermediary with Iran; Ali Agaoglu, a real estate developer who has carried out showpiece projects with Toki, Turkey’s public housing agency; and Murat Kurum, the head of Toki’s commercial arm.

In a statement to Borsa Istanbul, the stock exchange, Halkbank, said it had been asked for documents as part of the investigation. The bank’s shares lost more than 12 per cent on Tuesday, with the leading stock exchange index declining 5 per cent.

By Tuesday evening, some 49 people – including Baris Guler, Salih Kaan Caglayan and Abdullah Oguz Bayraktar, the sons respectively of the interior minister, the economy minister and the environment and urban planning minister – were reported to still be held for questioning in what prosecutors said was a three-part probe focusing on allegations of corrupt tenders in the construction sector, the violation of zoning laws, and gold smuggling.

Last year Turkey exported more than $6bn in gold to Iran, partly to avoid sanctions on bank transfers.

Since ministers in Turkey are generally protected by parliamentary immunity, the arrests come as close as is legally possible to the heart of the government of Recep Tayyip Erdogan.

In what appeared to be his response to the investigation, Mr Erdogan denounced what he said were “traps” set by “dark forces” at home and abroad. “Turkey is not a country where such operations can be made,” he told a gathering in the ruling AKP’s stronghold of Konya. “It is not a banana republic or a third-class tribal state.”

The investigation comes against a backdrop of sharply increased tension between the Islamist-rooted AKP and the movement of Fethullah Gulen, a Pennsylvania-based preacher, which critics and even some AK party members say has infiltrated Turkey’s institutions, notably the police, judiciary and prosecution service.

The Gulenists deny the claims, saying they have no political goals, although some members concede that they are no longer Mr Erdogan’s allies after a long period during which the two forces successfully worked together against Turkey’s old military-backed order. Each side now accuses the other of seeking too much power and being unaccountable to society.

Some government officials now label the Gulenists a “state within the state”.

Mr Erdogan has declared a goal of closing down or transforming pre-university cramming schools that AKP officials say serve as a recruiting ground for the Gulenist movement. Although two AKP MPs have resigned over the confrontation, Mr Erdogan has dismissed the movement, saying it is supported by only 1 to 2 per cent of the electorate – but the Gulenists say they have much wider support.

Possible connections to the Gulenist movement have been highlighted by the involvement of Zekeriya Oz, one of the leading prosecutors in the case. He previously jailed journalists who wrote about the alleged links between Mr Gulen’s movement and the police.

Gulenist members deny any link to the investigation. “This is nothing to do with the movement; it is of course just related to the courts,” Cemal Ussak, a longstanding member of Mr Gulen’s community, said of the latest detentions.

Mr Gulen himself has said in recent sermons that he has no intention of fighting against the state, but in seeming references to Mr Erdogan he denounced “Croesus” – the Greek figure of legendary wealth – and “pharaoh”.

Some government officials argue that even if the case is founded on genuine allegations, its timing is politically motivated and comes as tension rises between Mr Erdogan and the Gulenists ahead of elections next year in which the prime minister hopes to consolidate his power.

“Allegations of corruption could become a powerful tool in the hands of the Gulenists if this fight continues,” said Wolfango Piccoli at Teneo, a consultancy. He pointed out that the movement also controls media outlets, including Turkey’s highest circulation newspaper.

“Erdogan knows very well that it was corruption that brought Turkey’s old ruling parties down; if we saw more of these allegations concerning AK-related figures it would be a real problem for him.”

Timothy Ash at Standard Bank added that for Turkey, which is overwhelmingly dependent on short term capital to underwrite its current account deficit, “concerns about political vendettas involving businesses make life more difficult”.

In recent months, some businesses connected with the Gulenist movement have been put under tax investigations, as have groups linked to Turkey’s old secular elite, such as Koc Holding, the country’s biggest company. Turkey’s ministry of finance says the investigations have no political agenda.

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