Turkey's Koza Plummets as Police Break in After Takeover

  • Companies accused of financing Erdogan's foe Fethullah Gulen
  • Koza-Ipek also owns two national TV stations and a daily paper

The publicly listed companies owned by Turkey’s Koza-Ipek Holding plunged on the Istanbul stock market as police broke into the group’s Ankara headquarters and tear gassed protesters outside following a government seizure of management.

Gold miner Koza Altin Isletmeleri, energy explorer Ipek Dogal Enerji and miner Koza Anadolu Metal tumbled, erasing about 500 million liras ($170 million) in market value. A prosecutor appointed a trustee to manage the company while it’s under investigation on charges of financing the Fethullah Gulen religious movement. Gulen, a former ally of President Recep Tayyip Erdogan, was declared the leader of a terrorist organization following a 2013 corruption probe that Erdogan blamed on Gulen’s followers.

The operation against Koza-Ipek is the latest crackdown against companies and organizations linked to Gulen. Koza-Ipek has interests in fields including mining, energy, construction and media, according to its website. Its three publicly traded units had a combined market value of about $1.3 billion as of the close of trading in Istanbul on Tuesday, according to data compiled by Bloomberg.

Foreign Ownership

"Foreign ownership is above 85 percent in Koza Altin and this kind of news is probably among the worst for foreign investors as it hurts the visibility and predictability of investment cases,” according to Gulsen Ayaz, a director of institutional equity sales at Istanbul-based brokerage Deniz Yatirim Menkul Kiymetler AS. “The Turkish government has made its stance on the Gulen movement very clear and doesn’t refrain from taking action, launching investigations against corporates who they think might be or are somehow linked to this group."

Earlier this year, the Turkish government also seized management of Asya Katilim Bankasi AS, or Bank Asya, a lender linked to the Gulen movement. Bank Asya’s market capitalization has dropped to about $235 million from more than $2 billion in 2009, when it was Turkey’s biggest Islamic bank. Erdogan and Gulen attended its opening ceremony together in 1996.

Media Takeover

Koza-Ipek Holding is accused of crimes including money laundering and accounting fraud to fund what the government now calls the “Fethullah Gulen Terrorist Organization,” or FETO, according to the state-run Anadolu Agency. The group’s 23 companies were also raided by police in September.

Supporters said the operation was an attack against critical media five days before elections on Nov. 1. Koza-Ipek owns two national TV stations, Kanalturk and Bugun TV, as well as a daily newspaper, Bugun. The TV stations have in the past month been dropped from platforms including Digiturk, whose management was seized by the government in 2013, and satellite service provider Turksat.

The U.S. Embassy in Turkey expressed concern about pressure on the media, without specifically mentioning the Koza-Ipek takeover.

"The US believes strongly that freedom of press/expression are universal rights," the embassy said via its Twitter account on Tuesday. "When there is a reduction in the range of viewpoints available to citizens, especially before an election, it is a matter of concern."

Koza Altin plunged 12 percent to 17.40 liras, the lowest level since Jan. 23. Ipek Enerji fell 9 percent to 1.94 liras. Koza Anadolu dropped 12 percent to 1.64 liras, making the three shares the worst performers on the Borsa Istanbul 100 Index.

(A previous version of this story was corrected to accurately reflect the three publicly traded Koza-Ipek companies’ current total market capitalization.)

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