It has been revealed that three addresses were targeted in raids across Istanbul today as the Turkish Republic’s Public Prosecutions Office launched an investigation into allegations of corruption and bribery its made operation remarkable pro- AKP government businessmen.

Turkish police detained 22 people, including high-profile businessmen and sons of cabinet ministers, in an investigation into alleged graft and bribery in Istanbul, the state-run agency reported, sending shock waves through Turkey’s political establishment months ahead of crucial elections.

Local media reported that police launched a series of dawn raids Tuesday, arresting businessmen, municipal leaders, relatives of cabinet ministers and the chief of a state bank. The news sent Turkey’s financial markets lower, with the benchmark stock index falling more than 2% and the lira sliding 0.5% against the dollar.

There was no immediate comment from Turkey’s government or from the police force.

Istanbul Gov. Huseyin Avni Mutlu said that the operation was still continuing but refused to give details. “At this stage it would not be legally right for me to make a statement. Once the operation is concluded we will share information.”

Commentators immediately linked the arrests to an increasingly public battle, with the ruling Justice and Development Party, or AKP, pitting supporters of Prime Minister Recep Tayyip Erdogan against a faction loyal to Fetullah Gulen, an influential U.S.-based cleric whose broad support helped anchor the party’s political dominance for more than a decade.

Over the past month, Mr. Erdogan has accelerated a yearlong effort to curb the power of the Gulen faction. Analysts say the cleric’s followers control key positions in the Turkish police force and judiciary, which they have used to wield influence over the government and attack political opponents.

“This will cause more than political instability, we have waves of uncertainty and dense fogs spreading over Turkey…Now the AKP’s unity is broken. The whole mythology on which the conservative movement fed suddenly disappeared,” said Atilla Yesilada, an Istanbul-based analyst for Global Source Partners.

The AKP comfortably remains the country’s most popular political party, but its internal rifts have become increasingly public in recent months, emboldening antigovernment segments of society.Antigovernment demonstrations in the summer  that drew millions marked the most significant public challenge yet to Mr. Erdogan. But they have yet to boost the divided opposition or dent the government’s popularity.

Among those questioned by police on Tuesday was construction magnate Ali Agaoglu, one of Turkey’s richest men and a high-profile player at the center of a decadelong Turkish building boom, said Hasan Rahvali, chief executive of Agaoglu Group.

Local media also reported that the police detained the sons of ministers, with the number varying from two to four. Economy Minister Zafer Caglayan and Interior Minister Muammer Guler, whose sons were reportedly among those detained, unexpectedly canceled their political meetings this morning. Mr. Caglayan’s spokesman wasn’t available to comment on the reports.

Suleyman Aslan, the chief executive of, Turkiye Halk Bankasi AS HALKB.IS -8.23% , or Halkbank, was also detained, according to media reports that couldn’t be verified. Shares in the bank fell as much as 5% after reports of the police search emerged. Halkbank didn’t immediately respond to requests for comment.

Until late last year, Halkbank processed payments for Turkish government purchases of Iranian gas, allowing Ankara to circumvent U.S. sanctions to stop financial institutions from working with Iran’s central bank.

The news comes ahead of March local elections—a litmus test of Mr. Erdogan’s popularity ahead of his expected bid to become Turkey’s first directly elected president next August.