A New Episode in the AKP’s Confrontation with the Dogan Group

Publication: Eurasia Daily Monitor Volume: 6 Issue: 34

Dogan media group (DMG), a conglomerate of various media companies owned by Dogan Holding, was fined on February 18 for tax evasion and accounting irregularities for the period from 2003 through 2006. DMG has been ordered to pay a total of TL 826.2 million ($484.3 million)132.9 million in overdue taxes, 693.2 million ($407 million) in penalties, and a special irregularity fee of TL 165,000 ($97,000). DMG has 30 days to pay the fine or appeal the decision (Anadolu Ajansi, ANKA, February 19; Today’s Zaman, February 20).

Soon after receiving the notice, DMG group announced that the fine "will be noted in Turkish finance history as the greatest injustice imposed on a company." DMG maintains that the alleged unpaid taxes concerned the sale of some of its shares of the company to the German Alex Springer group in 2007. Negotiations for the sale began in 2006 and ended in early 2007. According to the DMG, under the Turkish Commercial Code the sale was finalized in 2007 and it acted in conformity with Turkish regulations and paid the taxes as of 2007. DMG claims that the tax authorities decided that "the sale took place in 2006 and that the resulting tax had to be paid the same year." Since DMG believes that this is illegal, it will challenge the allegations in court. "We are committed to unmasking the true intentions and vindictiveness that rests behind this illegal and unconscionable fine," according to the company (Hurriyet Daily News, February 19).

The incident immediately sparked a nation-wide controversy. Supported by the main opposition party, the Dogan group launched a campaign to present this decision as a form of political punishment by the governing Justice and Development Party (AKP), while Prime Minister Recep Tayyip Erdogan claimed that the DMG-controlled media was using freedom of the press to advance their bosses’ commercial interests. Since this is not the first public confrontation between the Dogan group and the AKP government, the harsh statements coming from both sides on February 19 might presage a new war of words in the Turkish political scene.

In early September the group confronted the government over allegations of fraud raised by German prosecutors against a charity organization established by conservative Turks living in Europe. Deniz Feneri e.V. allegedly channeled donations to private corporations in Turkey, most notably to the Kanal 7 TV network, which is owned by close allies of the AKP. The media outlets critical of the government featured the German indictment in their headlines. DMG newspapers and TV stations led this campaign, which questioned the involvement of Erdogan’s associates and the government’s silence about this and other accusations of corruption. Erdogan took on the fight, warning the DMG publicly about the consequences of its coverage, and claimed that the Dogan group was trying to take revenge for the government’s earlier refusal to help its business interests (EDM, September 11).

The Dogan group denied the allegations and accused the government of suppressing freedom of the press. Statements by Erdogan that he could reveal some documents proving inappropriate requests made by the Dogan group were interpreted by the DMG as blackmail to quash any allegations about AKP politicians and pro-AKP businesses and media outlets (Radikal, September 9).

Following a war of words, including personal attacks, between Erdogan and Aydin Dogan, chairman of the Dogan group, a de facto truce was thought to have been reached when the two met at a wedding reception (www.habervitrini.com, October 25). Meanwhile, the investigation of various Dogan group companies, which predated the confrontation in September, continued; and the current showdown over alleged tax fraud has reheated this controversy. Both sides have returned to their entrenched positions, leveling more or less the same accusations against each other.

Startled by the DMG’s charges, the Ministry of Finance released a statement defending its decision and arguing that the penalties levied on Dogan were based on careful investigation. The statement also criticized the DMG’s attempts to misrepresent the case and said that the Ministry would seek legal recourse for the DMG’s defamation campaign (Anadolu Ajansi, February 19). A statement from the AKP also noted that the investigation had started long before the conflict between Erdogan and Dogan and that Erdogan had not requested this tax examination. Noting that some AKP deputies were also being investigated on different charges, the statement claimed that the DMG was not being discriminated against (www.ntvmsnbc.com.tr, February 19).

In its response to these statements, however, the Dogan group questioned the sincerity of the other investigations and maintained that by constantly scrutinizing various companies in the group over a long period of time, the government was seeking to intimidate the group’s independent reporting (Cihan Haber Ajansi, February 19).

Regardless of the final ruling on the fraud allegations, this incident is likely to deepen political divisions. The critics will continue to view Erdogan’s aggressive attitude as yet another indication of his authoritarian leadership style and disrespect for democracy. Moreover, it will strengthen their belief that the AKP is intent on using state power to silence opposing views and consolidate the position of his own cronies in business and the media. Government circles will continue to present it as yet another victory against vested business interests, which have traditionally acquired their wealth through political influence.

As an earlier EDM report concluded, however, this episode once again shows "the continuing paucity of impartial news coverage that has not been filtered through, and frequently distorted by, Turkish media owners’ political preferences and perceived business interests." It is an example of how public attention can be diverted away from more pressing economic and social issues (EDM, September 11).