Tentacles of corruption: How gov’t-linked businesses have been fed by Istanbul AKP municipality for years

The main opposition Republican People’s Party (CHP) candidate Ekrem İmamoğlu finally received his mayor’s mandate for Istanbul last week, 17 days after the March 31 elections were held.

His reign may be short-lived, however. Turkey’s Supreme Election Council (YSK) is currently debating whether to accept the ruling People’s Alliance’s extraordinary appeal to cancel the Istanbul election results after it raised claims of serious electoral fraud.

The two parties that make up the alliance, the ruling Justice and Development Party (AKP) and the far-right Nationalist Movement Party (MHP), have pushing the YSK to rule in their favour. As all this took place, the extravagant last-minute spending by the outgoing AKP Istanbul administration has brought another scandal into the spotlight around the controversial elections.

On April 17, the day İmamoğlu received his certificate, news broke that an amount close to 14 million lira ($2.4 million) was spent on work on the municipal website, including preparing and maintaining graphics and videos.

The company listed as the recipient on the invoice, İstanbul Dijital Medya Ticaret A.Ş., is owned by the outgoing AKP administration’s Istanbul Metropolitan Municipality Deputy General Secretary, Çağatay Kalkancı.

The media company’s manager is Abdurrahman Tığ, a candidate for nomination for the AKP in the June 24 parliamentary elections last year.

Tığ is also known as the owner of Istanbul Agency, a media company that puts out a bulletin every 15 days for the municipality. This works out well for Kalyon Group, an AKP-linked business conglomerate that owns the media group, including pro-government outlets ATV and Sabah – the bulletin is printed in Kalyon’s press.

Another scandal around the AKP municipality’s expenditure surfaced earlier this month, this time involving family members of Ahmet Mahmut Ünlü, more commonly known as Cübbeli Ahmet Hoca, a preacher from a Naqshbandi sect known for his support of the ruling party.

An advertising firm belonging to Ünlü’s son-in-law Esat Palazoğlu and his elder brother Muhittin Palazoğlu received 3,597 million lira ($615,000) for the tender to organise a marathon in Istanbul’s historic peninsula.

These two instances of municipal money going to circles close to the ruling party both took place after the March 31 elections. They are a drop in the ocean compared to the total amount of rent government supporters have made out of the people of Istanbul.

The municipal budget in 2019 came to 23.8 billion lira ($4.06 billion), while its water and sewage and transport institutions had a combined budget of 34.8 lira ($5.95 billion). In addition to this, the total turnover of the municipality’s 28 subsidiary companies amounts to 24 billion lira ($4.1 billion).

From these sources, over 16 billion lira ($2.74 billion) is set aside for investment, and this amounts to a huge source of income for government-linked businesses. A large portion of these own both construction companies and media outlets.

albayrak

The first of these is the Albayrak Group, a conglomerate that includes Islamist pro-Erdoğan newspaper Yeni Şafak in its roster of companies operating in fields from construction to tourism.

The group was founded in 1952, but it really took off after the AKP came to power in 2002, thanks in large part to the income from projects in Istanbul.

Albayrak Group’s tenders in the city include operating meter readings for the water and sewage management company İSKİ and gas provider İGDAŞ, car rental for the municipal government, waste management, work on the metro system, constructing an engine factory for the municipal transport company, among others.

The company owned by the Albayraks’ son-in-law, Adem Altunsoy, whose marriage into the family was officiated by President Recep Tayyip Erdoğan, made 250 million lira ($42.87 million) in 2016 from seven tenders in Istanbul.

Kalyon

The Kalyon Group is another conglomerate that faces heavy losses if the AKP loss is made final. Besides owning a 40 percent share in the construction of Istanbul’s new airport, the group’s companies have won notable tenders from the Istanbul administration including the construction water pipeline worth 9 billion lira ($1.54 billion), a Metro line worth 849 million lira ($145 million), and an underpass worth 52 million lira ($8.9 million).

At the same time, the government’s stable of media outlets, most of which are owned by conglomerates like Kalyon and Albayrak, receive huge amounts from the Istanbul municipality in advertising fees.

Cengiz

Construction firms with government links, such as Cengiz Holding,  have also made great gains from Istanbul thanks to favourable decisions from the AKP municipality.

One of these saw Cengiz Holding granted permission, free of charge, to build on the Hüseyin Avni Paşa grove in Üsküdar, an upmarket district on Istanbul’s Asian side.

A recorded phone conversation between the company’s owner, Mehmet Cengiz, and former Environment and Urban Planning Minister Erdoğan Bayraktar was leaked in December 2013. The recording appeared to show that Cengiz had demanded the land to build 10 homes.

Another 918 square metre plot of land was granted to Cengiz in Maltepe, Istanbul in 2017, by direct order of Erdoğan. Cengiz Construction is planning to build a residential and commercial areas on the land.

Cengiz and another government-linked conglomerate, Limak, were granted another lucrative tender in 2016 to build a 169-kilometre highway linking the Kurtköy district of Istanbul to the nearby city of Sakarya.

Tarık Balyalı, a member of the Istanbul municipal council for the CHP, told Ahval that under the AKP, the municipality has passed tenders to its own subsidiaries which then distribute them to pro-government businesses.

“In 2018, the municipality has handed 64 out of 408 tenders to its own subsidiaries. These 64 were worth a total of 3,254 billion lira ($556 million), around a third of the total value of tenders,” Balyalı said, adding that a large number of these had not been profitable.

To illustrate that point, Balyalı described one tender that entailed expenses worth over 182 million lira ($31.2 million) that the municipality granted to its subsidiary, Kültür A.Ş., for 181.9 million lira. The subsidiary company then split the project into 17 parts and granted these two five businesses, receiving just 140.4 million lira ($24 million) in return.