The Council of State, Turkey's top administrative court basedin Ankara, on Friday annulled a government decree that would have required it to be informed about police investigations. It ruled the regulation "contradicts the principle of the separation of powers."

It follows raids on December 17 that led to the arrests dozens of people, including the sons of cabinet ministers, after a major corruption investigation centering on the state-run lender Halkbank. It relates to bribery involving public tenders, gold smuggling and illegal dealing with the Iranian government to get around international sanctions.

Those arrested include Halkbank's chief executive, Suleyman Aslan, and three ministers whose sons have been implicated in the allegations, the now-former Interior Minister Muammer Guler, Economy Minister Zafer Caglayan and Environment Minister Erdogan Bayraktar. The three man have stepped down but denied any wrongdoing.

"We've seen photos of huge amounts of cash which were recovered after these raids. The head of the state-controlled bank had 4.5 million dollars in a shoebox. The son of the minister of the interior, one of the people who's resigned, also had a large amount of cash stored away in strongboxes and even had a counting machine to keep track of it all," correspondent Andrew Finkel told DW on Wednesday.

The scandal widened on Friday not only with the court's decree, but also the resignations of three lawmakers from Erdogan's ruling Justice and Development Party (AKP), who were threatened with expulsion for publicly criticizing the government. They are former culture minister Ertugrul Gunay, Izmir parliamentarian Erdal Kalkan and Ankara lawmaker Haluk Ozdalga.

Gunay announced his resignation from his party during a press conference in Ankara.

"The party evolved in two different wings: The wide base of people who have been oppressed and an overbearing mentality on the top. This mentality has no chance now," he said.

The scandal is proving to be one of the most serious challenges to the three-term rule of Erdogan, with the ministers' resignations earlier this week forcing a , as well as sending the Turkish lira to record lows.

Turkey's main BIST 100 stock exchange hit a 17-month-low while the cost of insuring Turkey's debt against default jumped to an 18-month high on Friday.

Erdogan speaks

Speaking in the city of Sakarya on Friday, Erdogan labeled the corruption investigation "an obstacle to building a new Turkey." He has repeatedly said the corruption inquiry is a conspiracy against his government.

Erdogan's attempt to bring in the new police regulation came because the investigation caught his government by surprise - the probe was kept secret from commanders who might have informed the government in advance.

The Erdogan government first sacked dozens of police officers involved, including the head of the force in Istanbul, and then announced the new regulation - blocked on Friday by the Council of State.

Turkey's army has also issued a statement saying it would not get involved in political debates. On Friday, there were demonstrations against the AKP in Ankara [seen above] and in support of the party in Istanbul.

EU calls on Turkey to address allegations

The European Union urged Turkey to address the latest corruption allegations transparently.

"I urge Turkey, as a candidate country committed to the political criteria of [EU] accession ... to take all the necessary measures to ensure allegations of wrongdoing are addressed without discrimination or preference in a transparent and impartial manner," said EU Enlargement Commissioner Stefan Füle.

Füle also welcomed Friday's court ruling, saying the blocked regulation "undermined the independence of the judiciary and its capacity to act."

jr/msh (Reuters, dpa, AFP)