By Daren Butler
ISTANBUL (Reuters) - Turkish police detained the sons of three cabinet ministers and several well-known businessmen as part of investigations into alleged corruption on Tuesday, state officials said, in a blow to Prime Minister Tayyip Erdogan months ahead of elections.
Police carried out dawn raids in the main commercial city Istanbul, detaining at least 18 people including prominent business figures, and searched the headquarters of state-run Halkbank in the capital Ankara, state officials and banking sources said. Halkbank shares fell some five percent.
Turkish commentators saw the hand of powerful Islamic cleric Fethullah Gulen behind the operation, whose network of followers holds influential positions in institutions from the police and secret services to the judiciary.
Erdogan and Gulen have been locked in an acrimonious row in recent weeks over government plans to abolish private "prep" schools, many of which are run by Gulen's Hizmet ("Service") movement and provide funding and new followers.
"It is a very bold move by the movement, one that you can't possibly ignore. It is a battle to curb each other's power," said Ahmet Sik, a journalist detained for a year over his book on Gulen's life and influence.
Turkey holds local polls in 2014 that will be a test of Erdogan's power after a year that has seen unprecedented protests and riots against what some opponents see as an authoritarian style of government. He remains broadly popular but some see his vulnerability in a rift with Hizmet.
Tuesday's operation, launched by the chief prosecutor's office in Istanbul, consisted of three separate investigations, according to the website of the mainstream daily Hurriyet.
One involved Halkbank, one of Turkey's biggest banks, whose offices were searched. Halkbank officials could not immediately be reached for comment.
Police also searched the headquarters of the Agaoglu Group of construction magnate Ali Agaoglu, 59, its chief executive Hasan Rahvali told Reuters.
"We are talking about a wide-scoping investigation here. It is not focused on Ali Agaoglu," Hasan Rahvali, the chief executive of Agaoglu Group, said.
"This investigation is related to claims of bribery against some public officials. They searched the company in the early hours this morning but could not find any criminal evidence."
He said Ali Agaoglu had been asked by the police to come and make a statement as part of the investigation.
A third investigation focused on the mayor of Istanbul's Fatih district and the three ministers' sons, the newspaper said.
DEEPENING POLITICAL ROW
The sons of Interior Minister Muammer Guler, Economy Minister Zafer Caglayan and Environment and City Planning Minister Erdogan Bayraktar were detained, according to state officials in Ankara and Turkish newspaper reports.
Officials from the three ministries could not immediately be reached for comment.
Istanbul Governor Huseyin Avni Mutlu told reporters the investigation was continuing and he could not comment. Officials from Erdogan's ruling AK Party could not immediately be reached and police also declined to comment.
The developments, and fears of a deepening political row, weighed on Turkish markets. The main stock index was down 2 percent at 73,350 points, well below a 0.19 percent rise in the wider emerging markets index.
"These are fairly seismic developments. I guess inevitably people will link these to internal AK Party fissures and the battle between Erdogan supporters and the Gulen movement," said Timothy Ash, head of emerging markets research at Standard Bank. "The gloves will now be off."
Gulen runs a network of schools and other social facilities across the Middle East, Asia and Africa from a compound in the United States. He moved to the United States in 1999 after being charged with attempting to undermine the secular state.
He was subsequently acquitted but has remained in Pennsylvania, an enigmatic figure who gives little hint of his intentions in Turkish politics but is viewed with caution in all areas of the state.
Erdogan has incensed Gulen's movement with plans to abolish the "prep" schools. Istanbul member of parliament Hakan Sukur, a former international footballer and well-known follower of Gulen, quit the AK Party on Monday in protest.
Erdogan was first elected in 2002 and has introduced sweeping reforms that have broken the political power of the military and stimulated the economy. Some secularists accuse him of imposing islamist values, something he denies.
The movement has helped Erdogan's Islamist-rooted AK Party win a growing share of the vote in three successive elections over the past decade.
But there have long been ideological differences, with many of Gulen's followers seeing him as a more progressive and pro-Western influence on Turkey than Erdogan, whose views on issues from abortion to alcohol consumption have triggered growing accusations of interference in Turkish private life.
Since he came to power, Erdogan has built his own body of wealthy loyalists, largely from the same religiously minded professional and business class that revere Gulen. The rift between the two sides risks fracturing their support base ahead of local and presidential elections next year.
(Additional reporting by Seda Sezer and Birsen Altayli in Istanbul, Humeyra Pamuk and Orhan Coskun in Ankara; Writing by Nick Tattersall; Editing by Ralph Boulton)