海角大神

A string of legal and administrative actions against Turkey鈥檚 largest business empire has led some to suspect a government vendetta, risking damage to the country's investment-friendly reputation.

Koc听Holding, whose companies account for some 9 percent of Turkey鈥檚 GDP, incurred the wrath of Prime Minister Recep Tayyip Erdogan when a听Koc-owned听hotel sheltered protesters fleeing from police during mass protests in Istanbul in June.

Since then tax authorities have launched probes into two听Koc听companies, the government has cancelled a contract with one of its firms to build warships, and a university founded by听Koc听has been threatened with eviction over disputed back rent. Last month a lawyer filed a criminal complaint calling for an investigation into the company鈥檚 possible role in the overthrow of Turkey鈥檚 first Islamist government in 1997.

While both Koc and Ankara deny any of these measures are politically motivated, analysts say the claims are tarnishing Turkey鈥檚 business image at a time when the country badly needs more direct foreign investment.

Since the start of May, the value of the Turkish lira has plunged 11 percent against the dollar, and the Istanbul stock market has lost 14 percent of its value as investors moved their money out of emerging markets like Turkey.听

The currency slump has prompted fears over Turkey's reliance on short term foreign debt. With economists warning that the country needs to attract longer term foreign investment in order to secure itself against the threat posed by further currency devaluations, many are worried about the government's possible targeting of Koc.

鈥淚t seems like revenge, and I believe it鈥檚听damaging the image听of Turkey鈥檚 business environment,鈥� says Ugur Gurses, an economic columnist for the daily Radikal newspaper.

Others听remain unconvinced that there is any vendetta. 鈥淚t is a huge company with many different operations, so hard to say whether it is being disproportionately impacted by regulatory oversight,鈥� says Timothy Ash, head of emerging market research at Standard Bank in London.

Whether or not Ankara鈥檚 hand is truly behind the measures against听Koc, the perception is that it might be is adding to unease in the business community.听

鈥淲hat we need is direct investment, not loans, and if the government is taking revenge against听Koc, this sends out a bad message for our future,鈥� says听Gurses.

He believes the alleged targeting of听Koc听may fade away if more business-oriented minds in Ankara are able to appease Erdogan鈥檚 anger against the group.

Chain of events

The controversy surrounding听Koc听began when the Divan Hotel, close to Istanbul鈥檚 Gezi Park, opened its doors to anti-government demonstrators fleeing tear gas and riot police on the night of听June 15.

As scores of demonstrators sheltered in the lobby, including a German member of the European Parliament, riot police fired tear gas and a water cannon through its revolving doors. Although the hotel鈥檚 management made the decision to shelter the protesters,听Koc听Holding, which owns the hotel, has supported the decision.

The following day Mr. Erdogan, who has consistently portrayed the demonstrators听as violent and criminal, issued the first of a series of veiled threats against听Koc.

鈥淲e know which hotel owners helped terrorists. Those crimes will not remain unpunished,鈥� he said at a rally of his supporters in Istanbul.

The following month Turkey鈥檚 finance ministry launched an investigation into TUPRAS, the largest听Koc-owned company and Turkey鈥檚 sole oil refiner, and another听Koc听company, Aygaz, which sells liquefied petroleum gas.

Soon after news broke of the investigations, Turkey鈥檚 Finance Minister Mehmet Simsek denied they were politically motivated.

鈥淭he Tax Inspection Board conducts 50,000 tax investigations every year. There is definitely no connection between the Gezi incidents and tax investigations,鈥� he wrote in a message on Twitter.

Late last month a $2.5 billion contract to build six corvettes for the Turkish Navy given to another听Koc听subsidiary, RMK Marine, was unexpectedly canceled after it was awarded in January. The cancellation came after a rival firm that had been excluded from the bidding process filed a complaint with a business standards council within the prime minister's office claiming the tender had been unfair.

Meanwhile, Turkish media also reported last month that the Ministry of Forestry is preparing to evict a university听run听by听Koc from land听the ministry claims to own听for failing to pay disputed back rent of about 20 to 30 million Turkish lira ($10 million to $15 million).

The measures evoked comparisons with another incident of alleged government bullying of big business: a $3.8 billion tax fine levied against the Dogan group in 2009.听The fine came after newspapers belonging to Dogan, which owns the country鈥檚 largest media empire, took an aggressively negative line against Erdogan鈥檚 Islamist-rooted government, and the prime minister publicly rebuked owner Aydin Dogan.

A clash of power players

In an interview on Turkish television last month Koc Holding chairman Mustafa Koc, at once dismissed claims that his company was being targeted, but simultaneously defended his hotel's 'humanitarian approach' during the protests.

鈥淎ny change [in our investments] or cancellation [in our contracts], to date, is the subject of mere speculation. We want nothing to do with this,鈥� he said.

Koc Holding, founded by Mustafa's grandfather Vehbi Koc in 1926, is among a clutch of family-owned business empires that make up Turkey鈥檚 secular aristocracy.

While they retain much of their former economic clout, the political influence they once enjoyed has reduced dramatically over the past decade in which Erdogan鈥檚 Justice and Development Party has governed Turkey.

The newly affluent pious class that has flourished under Erdogan views this old elite with bitter resentment, referring to them by the derogatory term "White Turks" and accusing them of complicity in past state repression of devout Muslims.

On Sept. 16, a lawyer in the conservative city of Erzurum filed a complaint against听Koc听Holding and Dogan, calling for both to be added as suspects to a criminal case into the fall of Turkey鈥檚 first Islamist government in 1997. The trial involved more than 100 military officers accused of using covert pressure to engineer the overthrow of Prime Minister Necmettin Erbakan, an episode now referred to by most Turks as the "postmodern coup."

The complaint was filed the day after Erdogan made a speech in which he seemed to call for the prosecution of business and media groups he said were involved.

鈥淲asn鈥檛 there a contribution of conglomerates to [the 1997 coup]? Wasn鈥檛 there a contribution of print and visual media? I鈥檓 astonished that they aren鈥檛 on trial. I wonder why they aren't called to account,鈥� he said in a speech to industrialists in Istanbul.

Mustafa Polat, the lawyer who filed the complaint, told 海角大神 he had heard Erdogan鈥檚 speech before acting, but was not influenced by it.

鈥淜oc听and Dogan cooperated with the coup party and they took financial advantage of the situation,鈥� Mr. Polat says, adding that the companies are now being investigated by Turkey鈥檚 financial crimes bureau.

Polat is a complainant in the case because he graduated from a religious high school, and following the coup, legal changes barred graduates from these schools from training as lawyers, forcing him to study in northern Cyprus.

鈥淚f it wasn鈥檛 for the coup, I wouldn鈥檛 have had to go there,鈥� he says.

He added that at this stage it is not clear what penalty 鈥� if any 鈥� the companies could face. But he believes听Koc听deserves punishment regardless of the economic cost, using a Turkish saying: 鈥淭he finger听feels no pain that is cut off according to听Sharia law.鈥�