The wheel of fortune that keeps Turkey’s Erdoğan in power

When secularist opposition candidate Ekrem İmamoğlu was officially recognised last week as winner of the election to become the new mayor of Istanbul, Turkey’s biggest city and financial hub, one of the first things on his agenda was to copy and securely save all the files of his predecessors who belonged to President Recep Tayyip Erdoğan’s Islamist party.

“The time of serving ‘the man’, associations, persons, foundations, and religious groups has ended,” İmamoğlu said four days after the March 31 local polls. “We will start such a transparent administration that, everything, including my mayorship will be made public.”

But soon after, an Istanbul court banned İmamoğlu and his staff from downloading any file from the municipality's database. The court order means the new mayor could be blocked from finding answers to a question that many people in Turkey have long been asking. How deep is the corruption and cronyism of Erdoğan, his family and key supporters?

About the same time, the Interior Ministry issued a directive to all municipalities in Turkey. Based on amendments to the law, the directive told mayors across the nation that they would no longer be permitted to keep or establish their own municipal databases and all information would instead be held centrally. Municipalities would only be able to access information on the central database with government permission.

The loss of control of Turkey’s five largest cities in the municipal elections gave rise to deep anxiety within the ruling Justice and Development Party (AKP) that details of large-scale corruption might be leaked and exposed. Even though figures and companies loyal to the ruling party control some 90 percent of the Turkish media, the legal steps to pre-empt the leaks are extraordinary.

The AKP has been in power nationally since 2002 and the party and its predecessors have controlled the Istanbul municipality since 1994 when Erdoğan began his rise to power by being elected mayor of the sprawling metropolis that produces almost a third of Turkey’s GDP. Since, much of Turkey’s landscape has been transformed by large government-backed infrastructure projects carried out by companies close to the ruling party.

Critics say the government has used such projects as a way to channel public funds to loyalists in return for backing for the party to ensure its continued electoral success; a wheel of fortune for all involved.

AKP fears that incoming opposition parties might uncover a complex web of graft and kickbacks at town halls up and down the country may well be justified. Deutsche Welle last week cited a leaked internal report as saying Istanbul municipality had provided a total of $146 million to AKP-affiliated foundations and associations over the years.

The report said the biggest beneficiary was an educational foundation where Erdoğan’s son Bilal Erdoğan sits on the committee; it received $13.2 million. Another educational foundation, which Bilal Erdoğan helped to found and where the president’s daughter is on the executive board, was the second biggest recipient with $ 9.1 million.

A technology NGO chaired by Erdoğan’s son-in-law Selçuk Bayraktar came in next with $7 million of council funding. Some $5.1 million was also given to the Ensar Foundation, a religious organisation that provides dormitories and education for children that has been embroiled in a child abuse scandal.

Another one of Bilal Erdoğan’s projects, an archery training foundation, received $2.95 million, while a foundation headed by the brother of the AKP former mayor of Istanbul received $2.8 million. While funding charitable organisations is not against the law, it is questionable why largest sums were given to foundations linked to Erdoğan and the AKP.

Kalyoncu
Credit: Posta Newspaper, Kalyoncu Family Wedding with Demirören Family

The luxury Çırağan Palace hotel, an opulent former Ottoman seraglio on the shores of the Bosporus in Istanbul, was the scene this month of what the pro-government press described as the event of the century, a glittering wedding attended by 2,000 guests in which no expense was spared.

Attended by Erdoğan and the first lady, Emine Erdoğan, the ceremony brought together two of the country’s richest families – the Demirörens and Kalyoncus – in what one insider described as “a mafia style merger”.

The pro-government Daily Sabah newspaper said: ''Kalyon Group is a Turkish conglomerate, with major interests in construction. The company is also the owner of Turkuvaz Media Group, the parent organisation of the Daily Sabah that also includes the Sabah newspaper and major Turkish TV channels AHaber and ATV.

“The Demirören Group … is active in the energy, mining, manufacturing, construction, tourism and real estate sectors. The group added Doğan Group's media properties, including Hürriyet and Posta newspapers and TV stations Kanal D and CNN Türk, to their portfolio in 2018. It previously acquired Turkish newspapers Milliyet and Vatan from Doğan in May 2011. The holding also owns a licensed website providing Iddaa betting options.''

Together these two families control more than 60 percent of the Turkish media.

Control of the media is one of the key pillars of Erdoğan’s rule through which he is able to project his message to a public that still largely relies on television, and to a lesser extent, on newspapers for its news.

Apart from the Demirören and Kalyoncu families, Sancak Group is also prominent in the media sector. Since the AKP came to power, the company, under Ethem Sancak, a businessman who began in dairy and meat production, became a globally active entity in a wide range of sectors, especially in construction and defence. In 2013, Sancak Group bought three important media titles from the state Savings Deposit and Insurance Fund that it acquired from their previous owner in order to help settle a tax debt.

The Black Sea
Credit: The Black Sea

But while the president’s message is one that espouses Islamic values, his power is based on patronage and a complex web of economic interests.   

“Turkish President Recep Tayyip Erdoğan is rich. How rich is unknown. Critics estimate his wealth at several billion euro, the product of rampant corruption and cronyism in the Turkish state,” wrote journalist Craig Shaw on the investigative news site “The Black Sea”.

From a cache of 150,000 documents leaked from a Malta-based provider of legal, financial and corporate services, Shaw’s report offers rare insight into corruption at the highest levels in Turkey

“Through offshore companies in the Isle of Man and Malta, the Erdoğans secretly own an oil tanker worth nearly 25 million USD called the Agdash. The deal was constructed with Erdoğan's close friend and Turkish businessman, Sitki Ayan, and an Azeri-Turkish billionaire called Mübariz Mansimov, owner of Istanbul-headquartered shipping conglomerate, Palmali Group. Documents show that since 2008, the cost of the Agdash deal for the two businessmen totals nearly 30 million USD, with seven million from Ayan, and nearly 23 million from Mansimov,” Shaw wrote.

The report said the Erdoğans obtained the Agdash from Mansimov in 2008, using a company in the Isle of Man principally owned by the president’s son, brother, and brother-in-law.

 Control of the media in Turkey means most of the details of such leaks are largely kept out of the public eye, and prosecutions of journalists has ensured media outlets in Turkey not close to the ruling party practice a high degree of self-censorship.

A court sentenced Turkish journalist Pelin Ünker to more than a year in jail for her work on the Paradise Papers investigation into offshore tax havens after she revealed details of the business activities of the former prime minister, Binali Yıldırım, and his sons.

Erdoğan family
Recep Tayyip Erdogan arrives at a polling station with his family in a presidential election in Istanbul on August 10, 2014. (AFP PHOTO/BULENT KILIC)

The roots of the AKP’s wheel of fortune go back to mid-1990s when Erdoğan became mayor of Istanbul and began a system of patronage by issuing contracts to companies run by pious businessmen.

Critics say the businesses then helped finance Erdoğan’s political ambitions and set up the new party that won elections in 2002 promising an end to corruption. The start of formal accession negotiations with the European Union in 2005 helped Turkey secure large inflows of foreign investment that spurred economic growth. That helped public finances, which in turn could be spent on infrastructure projects that secured the network of patronage.

Since coming to power, Erdoğan’s government has amended the Public Procurement Law more than 160 times, making it more opaque to scrutiny.

“A loose financial pool was established and controlled by the political power,” said an expert who declined to be named. “This system is also a way of legally registering the commission payments by businessmen. But it would be wrong to think of this system as being limited to giant public tenders.  Even small contractors engaged in construction activities in the smaller district municipalities can participate in this system.”

AKP patronage has thus extended across the land into every corner of the country. Recordings leaked online as part of 2013 corruption investigations into cabinet ministers and their families revealed that construction companies even from small provincial towns were obliged to donate land to charitable foundations controlled by Erdoğan family members.

The government later had the investigation shut down and the prosecutors and police behind it were themselves arrested.