Photographer: Emrah Gurel/AP Photo

Raids Entangle Trump’s Turkish Partner in Coup Investigation

Updated on
  • Turkish police detained former CEO and chief legal officer
  • Dogan Holding’s shares fall by the most in more than a month

Turkish police detained two executives connected to Dogan Holding, the media and energy group that owns Istanbul’s Trump Towers, rekindling fears that the company is back in President Recep Tayyip Erdogan’s crosshairs.

After Donald Trump’s election victory, the group whose media interests had formerly antagonized the Turkish president registered the biggest surge of any company on the Istanbul exchange, on expectations that diplomacy would help cool the long-running quarrel.

Yet this morning’s events ”show that the link built between Dogan and the government is very fragile and the volatility of the group’s stocks may last longer than expected,” Burak Cetinceker, a money manager at Istanbul-based Strateji Portfoy said by e-mail, in response to the escalating probe.

In their first telephone conversation, the U.S. president-elect commended the Dogan group to Erdogan, who as recently as June had argued that Trump’s name should be scrubbed off the company’s Istanbul real estate. The post-election detente between the two leaders appeared not only to signal a new phase in intergovernmental relations, but a potential standoff between Erdogan and Trump’s local business partner.

Thursday’s proceedings against the Dogan Holding’s chief legal officer and former chief executive officer pushed the group’s shares down by as much as 9.9 percent at one point in Istanbul trading, before they trimmed the loss to 4.9 percent by 2:25 p.m. That pares the rally the stock has enjoyed since the Nov. 8 victory of Trump -- for whom Dogan’s central Istanbul skyscraper is named -- to 2.7 percent.

Coup Investigations

The detentions of Dogan Holding’s chief legal officer, Erem Turgut Yucel, and the group’s former CEO, Yahya Uzdiyen, were related to the earlier arrest of the company’s Ankara representative Barbaros Muratoglu, Dogan Holding said in a statement.

Although Dogan is closely associated with the secular establishment whose influence Erdogan promised to curtail when he assumed power more than a decade ago, Muratoglu is accused of links to the Islamic Gulen movement; a group the Turkish government accuses of instigating the failed coup attempt last summer.

Dogan Sirketler Grubu Holding, as the company is officially known, said the raids were on the individual’s offices and homes and will not have an impact on the business operations of either the company or its subsidiaries. The shares of the group’s publicly traded media units, Hurriyet Gazetecilik and Dogan Gazetecilik, fell by as much as 7.6 percent and 9.3 percent respectively, while the lira also breached a new record low.

“The detentions suggest the scope of these probes are widening,” said Haydar Acun, managing partner of Marmara Capital in Istanbul. “Uncertainty for investors is getting higher.”

Long-running Feud

The raids represent the latest chapter in the hostilities between Turkey’s leader and Dogan, which have occasionally turned the stock into something of a counter-indicator for the government’s grip on power.

When Erdogan was still prime minister, the company faced a tax fine that at one point dwarfed its market value. It was eventually reduced, but forced the sell-off of some key media interests and decimated its control of the industry.

The spat has taken on new proportions since Erdogan consolidated his rule with a move to the presidency in 2014. Soon afterward, a fuel retailer formerly owned by Dogan was banned from government tenders, re-enforcing a decision that had been annulled years earlier. Early last year, criminal charges were brought against Dogan’s founder Aydin Dogan, relating to the period before he sold the fuel distributor to central Europe’s biggest oil and gas company, OMV AG, which is now trying to dispose of the asset.

It was around that time that Erdogan called for Trump’s name to come off the Dogan-owned Trump Towers, and said that he regretted attending the building’s 2012 inauguration -- a photo opportunity that had been interpreted as a peace-building measure at the time.

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