Turkish opposition challenges conglomerates that ‘exploit’ the economy

When Turkey's main opposition leader pledged to nationalise the assets of the "gang of five" this week, the reference was obvious to TV viewers around the country. Under President Recep Tayyip Erdogan, five conglomerates have benefited from multibillion-dollar contracts for infrastructure mega projects that have characterised the 18-year rule of his Justice and Development Party (AKP). The preferential terms of these contracts and the companies' close ties to the government have earned them a generic nickname that roughly translates as "supporter companies" due to the backing they provide to the ruling party. In a budget speech in parliament this week, Kemal Kilicdaroglu, head of the Republican People's Party (CHP), vowed to end the "order of theft", saying: "We'll nationalise and seize all the investments of this gang of five that will exploit even our grandchildren." The five firms – Limak, Cengiz, Kolin, Kalyon and Mapa – are heavily involved in construction but have interests that span the Turkish economy, including media ownership, luxury hotels and the energy sector. They formed the IGA consortium that built and now operates Istanbul's new airport, a €22 billion ($26.8bn) tender they won in 2013, although Kolin transferred its stake to Kalyon last year. Like many such projects, which include ports, power stations, roads and hospitals, the airport deal took the form of a build-operate-transfer (BOT) contract. This sees the contractor run the project for a specific period of time – 25 years in the case of Istanbul airport – before passing it on to the state. The airport contract also includes a government guarantee of revenue to IGA for a minimum number of passengers, a clause common to BOT schemes. Although the operator said it had surpassed this figure in its first year, other BOT projects have failed to do so, at huge cost to the Turkish taxpayer. The airport, located north-east of Istanbul near the Black Sea coast, is linked to Anatolia by a third Bosphorus crossing that opened in 2016. Yavuz Sultan Selim bridge is operated by a private group under a deal that includes a government guarantee of toll income from 135,000 cars a day. According to reports, last year the government paid the operator 3 billion lira ($380,000) due to a shortfall in traffic, leading Turks to joke that they were paying the toll despite never having used the bridge. These contracts are often priced in foreign currency, adding further burden on the public purse due to the falling lira, which has lost half its value since mid-2018. A 2018 World Bank study placed Limak, Cengiz, Kolin and Kalyon in the global top 10 of public tender winners between 1990 and 2017, with Limak coming second after French energy giant Suez. While Suez won contracts around the world, the Turkish tenders were all domestic. In September, the personal relationship between the bosses of these firms and Mr Erdogan were laid bare in a televised ceremony to open a section of the North Marmara highway, which utilises the Yavuz Sultan Selim bridge. The owners of Cengiz, Limak and Kalyon stood in front of the guests as they were individually thanked by the president. "All thanks to you," Kalyon's chairman Cemel Kalyoncu replied. Mr Kalyoncu, Cengiz's Mehmet Cengiz, Nihat Ozdemir of Limak, Mapa chairman Nazif Gunal and Kolin's Naci Kologlu all have long-standing ties to Mr Erdogan. Several were caught up in a corruption investigation seven years ago that targeted the president's inner circle. According to the probe – labelled a coup attempt by Mr Erdogan, who was then prime minister and who quashed the allegations by removing thousands of police and prosecutors involved – businessmen were required to collect $450 million to purchase a newspaper and TV station to ensure their output remained supportive of the government. Today, nearly all of Turkey's media are controlled by companies that favour Mr Erdogan. In return, the magnates allegedly get their pick of the large construction contracts that have driven much of Turkey's growth during the AKP era. "The reward for supporting the government could be business contracts, but the punishment for not supporting it is NOT 'no contracts;' it is getting tax fines and possibly facing bankruptcy," Mert Yildiz, a senior economist at the Burgan Bank Group, wrote in a personal blog shortly after the investigation collapsed.

Turkish opposition challenges conglomerates that ‘exploit’ the economy

Opposition leader Kemal Kilicdaroglu pledges to nationalise the assets of the ‘gang of five’