Category: Business

  • A Guide to Turkey’s Tape Scandal

    A Guide to Turkey’s Tape Scandal

    BN BV681 erdoga G 20140310103931
    Turkey’s Prime Minister Recep Tayyip Erdogan addresses the crowd during an election rally in Kirikkale, central Turkey, on March 4.
    Reuters

    ERDOGAN HIZRSIZ

    ISTANBUL–As Turkey prepares for crucial local elections March 30, the country has been convulsed by the release of recordings of private conversations of Prime Minister Recep Tayyip Erdogan and media executives, bureaucrats and businessmen.

    Mr. Erdogan says his private conversations were wiretapped and confirmed the authenticity of some of the dozens of recordings, but says many have been edited to distort their meaning as part of a plot by his one-time political ally Fethullah Gulen, a U.S.-based Turkish imam with millions of followers. Mr. Gulen has repeatedly denied any involvement and the movement’s representative said on Monday he had “nothing to do with the tapes.” Mr. Erdogan’s spokesman did not respond to calls for comment.

    The recordings have been posted on social media, including YouTube and TwitterTWTR +0.76%, by accounts with the usernames Haramzadeler (the Sons of Sinners) and Bascalan (the Prime Swindler), but no one has claimed responsibility. Here is a look at recordings that have received the most attention.

    The Cash

    The most explosive tape, published Feb. 25, purports to show a conversation between the prime minister and his son, Bilal, discussing how to hide tens of millions of dollars in cash stored in the family’s home. The tape was alleged by the Prime Swindler to have been secretly recorded on the morning of Dec. 17, the first day of a sprawling corruption probe in which dozens of the premier’s allies, including three former ministers’ sons, were arrested on allegations of corruption.

    On the tape, a voice alleged to be that of the prime minister instructs a person identified as his son to get rid of all the money, preferably after dark to avoid attention. The other speaker, purportedly his son, says he has moved everything except €30 million ($41.6 million), which is proving difficult to shift.

    The prime minister has labeled the recording an “immoral montage,” and voiced anger at having his phone secretly wiretapped. The younger Mr. Erdogan has remained quiet through the scandal, and did not respond to calls for comment through his wholesale food company.

    Pro-government media went to recording studios in the U.S. and asked them to assess the tapes. Employees at the studios had no clue they had been involved in a Turkish political scandal, and though they reported the tapes had been edited they later said their analyses had been misused.

    The Court Case

    On March 4, the Prime Swindler published a tape accompanied by tweets alleging it showed that Mr. Erdogan meddled with a high-profile tax case against a government critic five years ago. Mr. Erdogan appears to tell Turkey’s then justice minister, Sadullah Ergin, of his disappointment with the acquittal of media mogul, Aydin Dogan, in a trial over price gouging.

    The prime minister appears to complain that Mr. Ergin had not followed the case closely enough. The men then appear to discuss in detail the prospects for reversing the decision.

    A person close to Mr. Dogan said the case apparently discussed on the tape concerned charges brought against his company by Turkey’s Capital Markets Board for allegedly causing losses to investors by overcharging its subsidiaries for products sold by a Dogan-owned firm. The case continues despite the company being acquitted several times in separate courts, the person said.

    Mr. Dogan, who was involved in a public row with Mr. Erdogan, has also received a handful of fines over tax irregularities that included one for $2.5 billion. They were eventually reduced by a large amount through court appeals and a government restructuring program.

    Mr. Dogan’s company issued a statement the day after the tape was released, saying it would “further shake the judicial system in Turkey” if it was authentic.

    Last week, Mr. Erdogan confirmed he discussed the case with Mr. Ergin, but said “it was only natural” to urge the justice minister to follow it more closely because it contained “dangerous” details, though he did not elaborate on what they were. He says the recording was “put together piece by piece.”

    In an interview last week with CNN Turk, Mr. Ergin said the conversation was taken out of context by editing, and that he and Mr. Erdogan were discussing complaints over alleged manipulation of court documents they were trying to figure out how to correct.

    The Ship Contract

    On March 4, the Prime Swindler published a tape and alleged it contained conversations between Mr. Erdogan and a shipyard owner, Metin Kalkavan, in which the prime minister appears to manipulate a tendering process.

    The Prime Swindler alleged the conversation was recorded shortly after the Turkish military awarded a $2.5 billion warship-construction contract to Koc HoldingKCHOL.IS +0.49%, a Turkish conglomerate that criticized Mr. Erdogan’s government during antigovernment protests last summer.

    In the recording, Mr. Kalkavan, owner of the Sedef Gemi Insaat shipbuilding company, appears to tell Mr. Erdogan he had not officially applied for the bid in writing, but the premier tells him he should formally complain about an unfair bidding process. Mr. Kalkavan appears to promise he would enter a bid if it were reopened.

    In the end, the bid was canceled and the contract was taken up by the Turkish navy, which has started work on building the ships.

    Shortly after the cancellation, a separate $3 billion government shipbuilding contract was offered to Mr. Kalkavan and Spanish Navantia, a Spanish state-owned shipbuilding company.

    Last week, Mr. Erdogan confirmed at least part of the recording, saying it was natural for him to advise someone to file a complaint to reverse wrongdoing. “As a result of the lawsuit, the bid is canceled. And the state earns a hundred, two hundred million dollars,” he said, in a reference to the navy contract.

    “They are as lowly as to wiretap this conversation,” he said in a televised speech, referring to followers of Mr. Gulen.

    According to the state-run Anadolu news agency, Mr. Kalkavan confirmed the conversation, but stressed it was “wrong to make conclusions based on just some parts of it.”  A spokesman for Spanish Navantia said the company had no doubt it won the tender based on the strength of its product.

    The Media

    The Sons of Sinners published a series of tapes, the first on Feb. 4, in which government officials allegedly order media bosses to change headlines, censor opposition politicians’ speeches and write stories planted by officials. According to the tapes, the orders were apparently executed without resistance.

    Mr. Erdogan did not challenge their authenticity and directly confirmed one recording in which he personally called a media executive to order the removal of headlines from an opposition speech as he watched them airing on TV. “Yes, I made the call… because there were insults against us, against the prime minister… and they did what was necessary,” Mr. Erdogan said in televised remarks mid-February. “We have to also teach them these things. Because the insults were not normal.”

    The content of many tapes was confirmed by Turkish editor in chief Fatih Altayli, who said in a television interview that the government would regularly interfere with the content published in his newspaper, Haberturk.

     

  • How Does Turkey Look From the U.S.?

    How Does Turkey Look From the U.S.?

    Arzu Kaya Uranli

    Arzu Kaya Uranli

    “Mr. Erdogan, a conservative Muslim, has often seemed more at home in Tehran or Baghdad than in Berlin or Paris, and in recent years he has sought to fashion the country as a power in the Middle East.” –Dan Bilefsky, The New York Times.

     

    “What does Turkey look like from abroad?” is the most common question I’ve been hearing recently when I contact someone in Turkey. What can I say? Since last May, Turkey’s image in the U.S. has noticeably been going somewhere we don’t want to know…

     

    Prime Minister Recep Tayyip Erdoğan has been called an autocrat by Westerners since last May. His arrogance, autocratic impulses and the way he uses anti-Semitic clichés have made him a unique figure in Turkish political history. Since the Justice and Development Party (AK Party) has experienced great success in improving health care, raising incomes and improving infrastructure and has been able to push the army out of politics, Mr. Erdoğan has become triumphant and has started acting as a lecturer. He has been telling people how many children they should have (three); whether or not women need abortions; that cesarean sections are not necessary or where and when people can consume alcohol. As a result, a poll last June showed that 54.4 percent of Turks said the “government was interfering in their lifestyles.”

     

    Then the social tsunami started. Since June with the Gezi demonstrations, uncertainties have been ongoing, especially after Dec. 17, 2013, when news of alleged corruption in the current government spread. However, the government’s autocratic moves are much clearer nowadays. The way the AK Party has proposed new laws to increase government control over judges and prosecutors and how many investigations have slowed down have raised suspicions that the government might be trying to hide corruption. The censorship of Turkish media and the recent attempts to change laws about the Internet to easily increase censorship are raising concern.

     

    Strangely, emergency care has been criminalized, too! Under a new law, a doctor faces the risk of being sentenced to up to three years in jail if he attends to an injured person who requires urgent medical attention outside a hospital. It seems as though the law is against doctors’ Hippocratic Oath, which embraces a principle of the Universal Declaration of Human Rights that prioritizes saving lives before anything else.

     

    “This new law is outrageous! It basically disregards medical doctors, humanity, the virtue of the Hippocratic Oath that is shared as a universal value, but puts forward a new kind of law that says ‘do as we say,’ ‘we will tell you whom to take care of and whom to ignore.’ Please tell us, where in the world would this be acceptable, except for the Erdogan’s new Turkey? Turkey is up for a big challenge. Erdogan is dragging the whole country with him as he is destined for an awful political ending. Will the country follow him or raise again from the ashes?” Dr. Hande Ozdinler indicated to me in our interview. She is a professor at Northwestern University, Feinberg School of Medicine

     

    The common view from the U.S. is that Turkey’s democracy, which has admittedly been improved in the last 10 years, is now being destroyed by the Turkish prime minister. Every day the problems between Turkey and its Western allies get deeper. They are watching quietly in order not to damage short-term interests, but they are concerned for Turkey’s longer-term stability.

    While all of these problems are happening at home, Mr. Erdoğan is accusing the investigation of being a politically motivated plot against his government from within the state. He ordered Turkish Ambassadors to explain the recent graft and bribery scandal from a conspiracy-oriented and partisan perspective to the foreign diplomats. It seems that the main goal is to stave off scandal. However, it would only demonstrate how vulnerable and helpless Erdoğan is and how he is losing his credibility in the international arena. Actually, some experts even consider that the recent developments are not merely an effort to cover up corruption, but that Erdoğan is trying to gain complete control over Turkey.

     

    “Democracy in Turkey has been damaged by the recent corruption allegations and probes. They demonstrate how fragile the democratic institutions of the state really are and how easily they can be manipulated by political masters.” Joshua W. Walker, director of Global Programs at APCO Worldwide, told me in an interview. He added, “The checks-and-balances of independent institutions that guarantee democracy in Turkey are certainly under attack. A vibrant civil society and media that can express dissenting views and are free to be critical are equally important, therefore I worry that both of these are under attack from aggressive Turkish politics that wants to win at all costs.”

     

    Also, Fırat Demir had said in Foreign Policy:

    Excuses notwithstanding, the corruption scandal and the government’s response to it have already weakened democratic accountability in Turkey, and deepened dividing lines among an already polarized populace. Once lauded for its democratic strength, or at least its willingness to move up the democratic ladder, Turkey threatens to become just like many others in its neighborhood: a hybrid regime ruled by a strong man who does not even try to give his rule the pretense of a democracy.

     

    Yes, the way Mr. Erdoğan has behaved shows us he still doesn’t fully understand and has not internalized democracy. He is viewed more and more as an autocrat rather than a democrat. Nevertheless, his defining value should not be majority rule but individual liberty. He has to understand that when a leader implements official authority he depletes the trust he has earned, but when he exercises moral authority, leading by example and treating people with respect, he strengthens it. Can Erdoğan learn these lessons for the sake of Turkey’s near-term stability or it is already too late?

  • Turkeys targeted as next crisis brews

    Turkeys targeted as next crisis brews

    Australia, as a large borrower will not be immune to another financial crisis.

    Fancy a trip to Turkey? It’s nice at this time of year and you too could marvel at what could be the next financial crisis unravelling.

    What’s more, the lira is as cheap as chips, although that’s part of the problem. Currencies in many emerging markets are being battered, with the Argentine peso plunging 16 per cent so far this year.

    So what’s that got to do with us? Nothing and everything, as the 1997 Asian or the 2007 global financial crisis showed. We know it’s always something from left field that triggers a financial run from which Australia, as a large borrower, is not immune.

    Maybe it won’t be Turkey, which last week had to double its key interest rate, but there are enough vulnerable countries for the problems each one has to come together in another global exodus of capital.

    All have some political problem, invariably with corruption at its root, along with an economic one such as too much debt, high inflation or a dangerous current account deficit, and often all three. They include Brazil, Russia, South Africa, India and Indonesia, which Abbott would do well to note.

    The rug is being pulled from under them by the United States Federal Reserve. It has been pumping extra dollars into the US economy, funding the world’s biggest carry trade. This is banks borrowing at a low interest rate in the US – in fact, at almost none at all – and investing it in bonds, stocks or commodity futures that earn much more.

    This carry trade is also why the dollar hasn’t dropped further.

    But the Fed confirmed last week that it would continue what it calls tapering this down. The T-word is making Wall Street inordinately jittery, even though it’s a plus that the US economy has recovered enough to come off life support. Still, it doesn’t want to lose its sugar hit of near zero official interest rates and increasing amounts of easy money looking for a home.

    The key difference between 2013 and 2014 is that the US will be driving world growth again. Better still, the Fed has told the market it’s not about to raise interest rates, either. In fact, they’re falling as money flees emerging markets for the safe haven of US bonds. Their yields are the benchmark for setting mortgages.

    Yet falling yields aren’t what you’d expect from tapering, considering it’s achieved by the Fed buying back fewer government bonds. You’d think less demand would lower bond prices, which increases their yield.

    Either way, they’ll determine our sharemarket, currency and interest rates this year. While Wall Street is due for a correction anyway, expect tapering to lift the US dollar and pull our dollar down. Even our interest rates have been falling slightly, although the Reserve Bank hasn’t done anything, and won’t at Tuesday’s meeting. And, if US bond yields stay down, this will discourage money from fleeing the Turkeys of the world.

    via Turkeys targeted as next crisis brews.

  • Istanbul staring at water crisis

    Istanbul staring at water crisis

    Turkey’s largest and most well known city of Istanbul is confronted with a serious threat of drought with water reserve now being sufficient for only 100 days due to lack of rain and snow, a senior water expert has revealed.

    “Having only 100 days of water reserve means that very tight measures should be taken,”Xinhua quoted Tugba Maden, a water expert in the Center for Middle Eastern Strategic Studies, as telling over phone.

    With a population of 14 million, Istanbul tries to obtain the city’s needs of water from 10 dams built in the Marmara and the Black Sea regions. Water levels in these dams have been decreased to the lowest point in six years with 35 percent in total. Three dams have already run short of water.

    Istanbul’s dams have capacity of holding 868 million cubic metres of water. Currently the water reserve is around 300 million cubic metres. Most seriously, the Melen streamlet has reduced its water reserve to 35 per cent of the total, sending the alarm signals.

    Melen streamlet, located in the Black Sea province of Sakarya, provides Istanbul with 676,000 cubic metres of water a day via Omerli dam.

    If the condition deteriorates, the authorities should begin transporting water to Istanbul from different water basins, said Maden.

    Turkey’s Forestry and Water Minister Veysel Eroglu tried to calm down the public, saying: “It is true that drought threats Istanbul in 2014. But we are taking all the necessary preconditions.”

    “We will build a new dam in Melen, which will bring a release to Istanbul people.”

    The minister also announced that two other giant dams would be built in Agva, 100 km from Istanbul at the Black Sea coast.

    The concerns related with the water shortage is not only limited with Istanbul. Experts foresee serious threat of drought in overall Turkey in general.

    via Istanbul staring at water crisis | Business Standard.

  • Turkish authorities purge regulators, state TV employees in backlash against graft probe

    Turkish authorities purge regulators, state TV employees in backlash against graft probe

     

    By Humeyra Pamuk, Published: January 18

     

    ANKARA, Turkey — Turkey has extended a purge of official organizations to the banking and telecommunications regulators and state television, firing dozens of executives in moves that appear to broaden Prime Minister Recep Tayyip Erdogan’s push back against a corruption investigation.The authorities had previously reassigned thousands of police officers and about 20 prosecutors and fired some state TV officials in response to the graft probe, the biggest challenge to Erdogan’s 11-year rule.

     

    Investigators are believed to have been looking into allegations of corruption and bribery involving trade in gold with Iran and big real estate projects, although full details of their charges have not been made public.The prime minister says the investigations, which began a month ago with arrests of high-profile figures including the sons of three of his cabinet ministers, are part of an attempted “judicial coup.”

    His opponents say they fear a purge of official bodies will destroy the independence of the judiciary, police and media.

    “It’s like reformatting a computer. They are changing the whole system and people in various positions to protect the government,” said Akin Unver, assistant professor of international relations at Istanbul’s Kadir Has University.

    Among dozens of officials dismissed in the latest round of firings, Turkish media reported Saturday that the deputy head of the banking watchdog BDDK and two department heads had been removed.

    Five department chiefs were fired at the Telecommunications Directorate, a body that carries out electronic surveillance as well as serving as the country’s telecom regulator, and a dozen people were fired at Turkey’s state channel TRT, including department heads and senior news editors.

    A government official said the firings were for “the benefit of the public” and that more could come.

    Pictures of money-counting machines and reports of cash stacked in the homes of people linked to the graft investigation have caused an uproar among the Turkish public.

    Unver said the aim of the purge at the telecom watchdog could be to prevent further videos and pictures being published on the Internet. “They are seeking [to impose] a monolithic structure over the Internet,” he said.

    Several thousand people took to the streets in Turkey’s biggest three cities Saturday demonstrating against a government-led draft bill to increase controls over the Internet. The bill would give the courts the power to rule on removing online material that “violates individual rights,” an article that opponents say is murky and could lead to the arbitrary closure of Web sites.

    In Istanbul’s Taksim Square, where police fired tear gas and water cannons to disperse the crowd, protesters called for the government to resign. Some chanted: “There are thieves around,” referring to the corruption allegations.

    Erdogan has suggested that the graft inquiry, which has led to the resignation of three cabinet ministers and the detention of businessmen close to the government, is an attempt to undermine his rule that has been orchestrated by Fethullah Gulen, a U.S.-based cleric with influence among the police and members of the judiciary.

    — Reuters

  • Nasdaq to take stake in Istanbul exchange

    Nasdaq to take stake in Istanbul exchange

    Nasdaq OMX will take a five per cent stake in Turkey’s stock exchange as part of a partnership deal providing the US firm’s technology and advisory services.

    The companies on Tuesday, said Nasdaq OMX, which operates the tech-rich Nasdaq Stock Market, would bring its most advanced suite of technologies and advisory services to Borsa Istanbul to build a “world-class capital markets hub” for the Eurasia region.

    In exchange, Nasdaq OMX will take a five per cent shareholding in the Istanbul exchange and in addition receive “a series of cash payments”.

    Nasdaq OMX has an option to increase its stake by an additional two per cent.

    The partnership also opens the possibility of Borsa Istanbul taking a minority position in Nasdaq OMX.

    “We are pleased to be working side-by-side with Borsa Istanbul as they evolve toward becoming an international hub that will attract global investors to the Eurasia region,” said Bob Greifeld, chief executive of Nasdaq OMX.