Future of Turkey's largest media group in doubt after major tax fine

 

THE FUTURE of Turkey’s biggest media company is in the balance after tax authorities hit it with the biggest fine in Turkish corporate history.

Dogan Holding, which owns roughly 40 per cent of the country’s media, has until tomorrow to provide €2.45 billion as collateral for a €1.7 billion tax evasion fine it received early in September.

Yesterday, lawyers for Dogan Holding applied for an injunction against the demand, which is more than the company’s market value.

“It amounts to a death sentence”, a senior Dogan executive said. “If we are forced to pay collateral, we. . . will be rendered inoperable.”

The case has drawn widespread criticism. The Organisation for Security and Freedom in Europe described the fines as “an unprecedented and alarming move. . . [that] could significantly weaken media pluralism in Turkey.”

Director of the Turkish Research Program at the Washington Institute for Near East Policy, Soner Cagaptay, sees parallels with Vladimir Putin’s Russia.

When Mr Putin jailed the Russian billionaire Mikhail Khodorkovsky in 2003, he says, “he sent other Russian oligarchs a strong message”, leave the country, or obey me.

“Should Dogan meet Khodorkovsky’s fate or come close to it, the remainder of the country’s rich. . . will be hard-pressed not to take inspiration.”

Turkish prime minister Recep Tayyip Erdogan remains insistent that the tax fine is part of a routine investigation. Interviewed by the Wall Street Journalon October 4th, he described comparisons with Russia as “disrespectful” to both himself and Mr Putin.

Relations between Mr Erdogan and Aydin Dogan, the billionaire owner of the media group and a mainstay of Turkey’s secular-minded establishment, have been tense since the former came to power in 2002.

A former star columnist for the Dogan group’s most popular daily, and a ferocious critic of the government, Emin Colasan says his bosses pressured him continuously to tone down his language from 2003 on. His forced resignation in 2007 caused outcry among secularists.

Tensions erupted into near open warfare in 2008, when the Dogan media began to cover a German criminal investigation into a Turkish Islamic charity linked to the government. “Media terror”, fumed Mr Erdogan, calling on supporters to boycott Dogan newspapers.

As the clock ticks down to the deadline for payment of the collateral, Turkish media coverage of the Dogan tax affair has been muted. Many Turks see Aydin Dogan as symbolic of the symbiotic and often deeply corrupt relations between business elites and governments following the liberalisation of Turkey in the 1990s.

“A corrupt press cannot be expected to uncover corruption, and that endangers democracy”, says Yavuz Baydar, a columnist for a rival daily.

Recent years, he adds, have seen much more efficient regulation of many sectors of Turkey’s economy. “The only power that remains unregulated is the press”, he says. “This could be a turning point.”

“If this is all about regulation of the sector, then how come other newspapers are not crawling with tax inspectors”, ripostes the Dogan executive.

While he admits the company is planning to sell its share of a petrol company to raise money to pay for the fine, the executive denies rumours that Dogan Holding is thinking of selling its media interests.

If it does eventually do so, the Turkish media landscape could look radically different. Relatively insignificant seven years ago, media outlets sharing the conservatism of Mr Erdogan’s government are now very powerful.