* Erdogan's office says recordings "completely untrue"
* Leaked audio purportedly of Erdogan and his son
* Opposition calls for government to resign
(Adds similar scenes in Kadikoy)
By Samia Nakhoul and Nick Tattersall
ANKARA, Feb 25 Turkey's Prime Minister accused
political enemies of hacking encrypted state communications to
fake a phone conversation suggesting he warned his son to hide
large sums of money before police raids in a graft inquiry that
reached into government.
In a dramatic session of parliament after posting of an
11-minute audio tape on YouTube, Tayyip Erdogan described it as
a shameless and treacherous "montage". He did not name those he
held responsible but made it clear he was talking of a network
run by former ally, Islamic cleric Fethullah Gulen.
The head of the main parliamentary opposition insisted the
conversation was genuine, telling Erdogan: "My advice to you is
either flee the country, take your helicopter, or resign."
Supporters of Erdogan, locked in a power struggle with Gulen
whom he accuses of contriving a graft scandal to topple him,
chanted "Tayyip, we came here to die with you", "stand tall,
don't bow" and "time is on our side".
"The people don't believe these lies," Erdogan called back
to loud cheers and applause from the public gallery.
Political tensions further stirred by the recordings, which
Reuters could not authenticate, hit Turkish assets amid broader
weakness in emerging markets.
Gulen, through his lawyer, has described the accusation of
complicity in the tapes as unjust and contributing to an
atmosphere of "hatred and enmity" in Turkish society.
Opinion polls taken before Monday's posting show Erdogan's
popularity little affected by the corruption scandal which broke
on Dec. 17 with the detention of businessmen close to him and
three ministers' sons. Monday's tape will prove a further test
of that resilience ahead of March local elections.
But the invective of debate could yet work in Erdogan's
favour at the polls.
Erdogan took over a country in 2002 mired in political
factionalism and economic crisis. Presenting the welcome face of
a strong leader, he united a wide spectrum of forces, fired the
economy, drove economic reform and tamed generals who had
toppled four governments in the latter 20th century.
"They went and made a shameless montage and released it,"
Erdogan told deputies. "They are even listening to the state's
encrypted telephones. That's how low they are.
"There is no allegation that we cannot answer."
The "they" cited by Erdogan was a reference to those among
the followers of U.S.-based Islamic cleric Gulen he accuses of
building a "parallel state" using influence in the judiciary and
police. Gulen denies the accusation.
"We will reveal one-by-one the disgraces of the parallel
organisation and we will make those who walk with them so
embarrassed they won't be able to go onto the street," he said.
The recording is purportedly of Erdogan and his son Bilal
discussing how to reduce the funds to "zero" by distributing
them among several businessmen. At one point, the voice
supposedly of Bilal says some 30 million euros ($40 million)
remain to be disposed of.
Names of two businessmen were also mentioned.
It is not clear how encrypted telephone conversations could
have been tapped on the scale the government is suggesting. The
MIT intelligence organisation remains under the control of
Erdogan and its head, Hakan Fidan, is a close ally.
Government officials said previous such recordings may have
featured ministers' and businessmen's voices but that the
conversations were put together from comments taken out of
context to give the impression of impropriety.
"They have wiretapped the Prime Minister, they have
wiretapped the chief of intelligence, ministers, many others.
They wiretap the phone for 18 months, they listen to you, and
then out of the 18 months of wiretapping they take two or three
sentences," said one senior official.
Gulen's Hizmet (Service) organisation, which runs a wide
network of schools, businesses and media groups, exercises
strong influence in the police and judiciary. The cleric denies
government accusations it drew on this network to undermine
Erdogan after a political falling out between the two men.
Erdogan may remain by far Turkey's most popular politician.
But the apparent conflict with Gulen and his purges of police
and judiciary have cast a shadow over what Western powers long
vaunted as a prime example of an effective Islamic democracy.
The main opposition Republican People's Party (CHP) played
the entire recording at a parliamentary group meeting with the
alleged words of Erdogan and his son displayed on a screen
behind leader Kemal Kilicdaroglu head Kemal Kilicdaroglu.
"We asked sound engineers. Could these be montaged?"
Kilicdaroglu said. "They said not to worry, these are all
genuine. All authentic. I am calling on Erdogan to release the
official records of who called whom at what time."
The formal opposition remains weak and lacking leadership,
the challenge coming from Hizmet which however has repeatedly
said it had no intentions to form a political party.
The tapes stirred a virtual uproar on Twitter and turned an
Ankara protest against the opening of a highway into an
anti-government demonstration. Riot police fired tear gas and
water cannon to disperse several hundred people, mainly students
who chanted "Government resign" and "Thief Tayyip Erdogan".
There were similar scenes in Istanbul's Kadikoy neighbourhood.
"MOB OF LOSERS"
The recordings surfaced two days after Erdogan's AK Party
began campaigning for March local elections to be followed later
in the year by presidential polls that could decide Erdogan's
political future after 11 years in power.
Erdogan, as in the past, suggested a broader conspiracy
against Turkey including an "interest rate lobby" of financiers
hostile to Turkey and "the terror lobby".
"The lobby of those who couldn't win the people's support,
the mob of losers came together once more on Dec. 17. Now they
are saying 'we are going to rule Turkey'."
The growing political uncertainty hit financial markets.
The lira hit two-week lows against the dollar
while stocks fell three percent.
Timothy Ash, head of emerging markets research at Standard
Bank, said Erdogan was likely to go further on the offensive
against those he deems responsible for producing these tapes.
"This seems to be a battle to the end..The Gulenists seem to
want to wound Erdogan below the waterline to undermine the AK
Party's poll performance in March," Ash wrote in a note.
Social media and video-sharing sites have been awash with
leaked recordings presented as evidence of wrongdoing. As with
the latest recordings, Reuters has been unable to verify their
($1 = 0.7285 euros)
(Reporting by Orhan Coskun, Parisa Hafezi, Daren Butler, Ece
Toksabay, Humeyra Pamuk, Ozge Ozbilgin; Writing by Ralph