Dangerously close

On June 24, the Turkish daily Cumhuriyet published the images of six Turkish citizens whose names appeared in the Panama Papers. With this simple announcement, the newspaper launched a series of reports on the “Panama’cı Türkler“. All six of the people mentioned were businessmen, and five of them ­­had close or distant ties to Turkey’s president, Recep Tayyip Erdoğan.

Shortly after the pictures were published, the phone rang in the Cumhuriyet newsroom. Apparently, the man on the line was Mehmet Cengiz – one of the six businessmen who had appeared in the paper. Cengiz’s company is part of the conglomerate that is building Istanbul’s new airport. The Turkish president himself has been pushing the highly controversial, high profile project forward. Cengiz’s name also appeared in connection with a 2013 corruption scandal that forced several ministers to resign.

According to Cumhuriyet, the man on the phone was very clear: “"You put my face on the front page, have you no shame? I will fight you (…) You sons of bitches, don't make a killer out of me.“ This could be, and perhaps should be, interpreted as a death threat – especially in Turkey, where critical journalists have faced sackings, lawsuits, or personal threats for years.

Shortly before Turkey’s parliamentary election in 2015, Cumhuriyet reported on the Turkish secret service’s arms deliveries to Syria. Since then, the daily has become a symbol in the fight for freedom of the press. At the time, the Turkish president personally pressed charges against the paper. A short time later, Can Dündar, the editor-in-chief, and Erdem Gül, the Ankara bureau chief, were taken into custody.

At his hearing on May 6 of this year, Can Dündar narrowly escaped an assassination: a man called him a traitor and shot at him, but missed. Shortly after, the court in Istanbul sentenced both Dündar and Gül to several years in prison for acts of treason. Both men have appealed the conviction, and will remain free until the trial begins. Their news team continues to work in this difficult climate.

Publishing this information in Turkey appears to be a dangerous endeavor    

Cumhuriyet is now the only Turkish medium to have gained access to the Panama Papers, the leaked documents of the offshore services provider Mossack Fonseca. In cooperation with the International Consortium of Investigative Journalists (ICIJ), the Organized Crime and Corruption Reporting Project (OCCRP) research network, and the Süddeutsche Zeitung, Cumhuriyet reporters have spent recent weeks combing through the 2.6 terabytes of data to find tracks leading to Turkey.

Until now, the names of 13 current or former heads of state have appeared in the Panama Papers, as have countless relatives and friends of dozens of others. Iceland’s prime minister has already resigned, and revelations have weighed heavily on the prime minister of Pakistan and the president of Argentina.

In Turkey, direct hits have not been as close to the top: neither Turkish President Erdoğan nor Prime Minister Binali Yıldırım has appeared in the leaked Panama Papers documents. However, several powerful business leaders with close links to the AKP have. The party has been in power since 2002, and Erdoğan was party leader until 2014, when he moved from the prime minister’s to the president’s office. The Panama Papers show that pro-government business leaders hid their money in shell companies. Publishing this information in Turkey appears to be a dangerous endeavor.

According to the leaked documents, Mehmet Cengiz, the man who allegedly called Cumhuriyet, is at the center of a network comprising at least 20 shell companies. In some instances, the information in the Mossack Fonseca documents cannot be used to decipher the purpose of these companies. Apparently, Cengiz went to great lengths to cover up his activities. However, several suspicious payments worth millions appear in the documents that the businessman does not wish to publicly discuss. Cengiz neither responded to the SZ’s requests for comment on the matter, nor on his threat.

The Panama Papers show that Mehmet Cengiz and his brother Ekrem hold power of attorney for a company named Bonito International Inc., which is registered on Niue Island in the South Pacific. Via this company, the brothers hold shares in MEC Metal Equipment Consultancy Co., a company registered in Great Britain. Until now, MEC was a complete mystery – it wasn’t clear which purpose it served, or what type of business it did. A document found in the Panama Papers contains an MEC Metal Equipment & Consultancy Co. contract for, among other things, “market studies and analysis related to the metals, mining and construction sectors in Russia and China.” The contract partner is “Vremax Properties Limited”, another unknown company registered in the British Virgin Islands. The two-page contract barely includes any mention of actual consulting services, but lists a payment of USD 3.07 million. The transaction was apparently made at the end of June 2008, when the money was wired to a Vremax Properties account at a private bank in Switzerland. Whether or not consulting services were provided remains unclear. However, the set-up could be a means of using a company to divert public funds into one’s own pockets. In Turkey, it is said that no one has been awarded as many public contracts in the past 14 years as Mehmet Cengiz.

Cengiz is a member of a relatively new class of conservative Muslim business people who have gained a great deal of money, power, and influence since the AKP came to power in 2002. The people in this group are referred to as the “Anatolian Tigers”. Today, many of them are among Turkey’s economic heavyweights. In some sectors, they have pushed out the old, Kemalist elite that dominated the country’s economy for decades.

Members of the Cengiz family regularly appear in the Forbes ranking of Turkey’s wealthiest. They have good relations with the governing AKP, and with Erdoğan himself. Like the president, the family is from Rize, a city on the Black Sea coast. Erdoğan University is located there, and Bilal Erdoğan, one of the president’s sons, sits on the advisory board of a charitable organization with Mehmet Cengiz.

In recent years, the scale of corruption has worsened

When the AKP came to power 14 years ago, it was elected because people hoped it would rid Turkey of corruption. In Turkish, AK means “white” or “pure”. It was no coincidence that Adalet ve Kalkınma Partisi – the party of justice and development – was abbreviated with these two letters. The AKP party used a light bulb as its logo, and promised its voters transparency. It pledged to oblige politicians to disclose their personal wealth on a regular basis.

This promise appears to have been long since forgotten. Today, the AKP is at the center of a clientelistic network that sees politicians and business people forming lucrative alliances. The journalist Şükrü Küçükşahın of the Al-Monitor analysis portal has argued that the new prime minister, Binali Yıldırım, will go down in history as the politician who failed to mention anti-corruption measures at his swearing in ceremony. Shortly after he entered office, Yıldırım dissolved an anti-corruption commission that his predecessor had founded. At the same time, hardly anyone expected the body to have any serious impact on corruption.

And yet corruption was rampant in Turkey long before the AKP. But in recent years, the scale of it has worsened, as the Turkish public became aware in 2013. At the time, determined public prosecutors launched a large-scale operation that saw dozens of people arrested, among them influential business people and three sons of ministers. It addressed illegal gold trading with Iran, bribery, and manipulated public tenders.

The affair shook the government to its core. On December 25, 2013, the prime minister ordered three ministers to step down, among them the minister of urban development. According to investigators, his son received bribes in exchange for building licenses and the awarding of public contracts. A few days later, Erdoğan dismissed another seven ministers, many of whom later faced accusations. One of them was Binali Yıldırım, the current AKP party leader and Turkey’s prime minister. According to investigators, Yıldırım, who was Turkey’s transport minister for many years, engaged in shady dealings when awarding contracts for the state railway. The accused denied any wrongdoing.

The scandal that unfolded in the public eye was not limited to a single company or politician. Rather, it represented the dismantling of the country’s political and economic leadership. Even Erdoğan came under fire. His son Bilal’s name appeared on an investigators’ list that was made public. The former prime minister’s son sits on the board of a foundation that allegedly acquired public properties in Istanbul at a suspiciously low price. At the time, phone recordings appeared on the internet in which Erdoğan could apparently be heard telling his son to make millions disappear. The authenticity of the recordings has been questioned, and Erdoğan has dismissed them as a shameless smear campaign.

The real-life political thriller climaxed and ended at the very same time. There were no further arrests. Within a few months, the government had thousands of police officers, court employees, and public prosecutors either transferred or dismissed. Erdoğan equated the investigations to an attempted coup by his rival Fethullah Gülen, an Islamic preacher who lives in exile in the United States and has millions of supporters in Turkey, many of whom work for the police and judiciary. Ultimately, investigations were closed and no charges were pressed.

More often than not, friends of the government have done good business

Several building contractors were among the men under investigation, including Mehmet Cengiz. It was not surprising that the illegal awarding practices were at the center of the investigations. In Turkey, the construction and energy sectors are notoriously corrupt. The government has changed awarding procedures for public contracts so many times that there are now almost as many exceptions as rules. The EU progress report regularly complains of susceptibility to corruption in the Turkish awarding system. In 2015, the report stated: “Due to numerous exceptions allowed by the public procurement law, public tenders remain particularly vulnerable to corruption.” The most recent changes have moved even further away from EU standards.

For years, the AKP won elections on the promise of a brighter future. Erdoğan wanted to build a “new Turkey”: he was going to make the country one of the world’s ten biggest economies by 2023, the year of the republic’s 100th anniversary. To achieve this aim, he initiated major infrastructure projects. The government has commissioned the building of dams, bridges, motorways and skyscrapers, airports and power plants. More often than not, friends of the government have done good business.

There is no shortage of examples that illustrate close ties between AKP leadership and Turkey’s conservative business elite. Fettah Tamince is one of the six “Panama Turks” that Cumhuriyet is currently reporting on because they own offshore companies. Tamince has profited directly from his contacts in the state apparatus. The eccentric building contractor and owner of the Rixos hotel chain has allegedly failed to declare his revenues or pay corporate taxes for almost a decade. The tax authorities have apparently granted him this privilege. In the Panama Papers, his name appears as the managing director and owner of several shell companies. He did not respond to SZ’s requests for comment. Tamince is said to be a good friend of the president.

Cihan Kamer, who earned his fortune with diamond trading, is another friend of Erdoğan’s. When the government exempted the diamond trade from the goods and services tax in 2004, one of his companies ostensibly benefited the most. Via a Mossack Fonseca shell company and a Panamanian foundation, Kamer held shares in companies and several accounts at Swiss banks. He did not respond to SZ’s request for comment. Kamer also did business with Erdoğan’s son Burak and his wife Sema. The three of them were apparently partners at the Atagolf company.

Remzi Gür, a businessman in the textile sector, also maintains an excellent relationship with the president. Turkish media have reported that he financed the university educations of all Erdoğan’s children. In 2008, Gur was sentenced to ten years in prison after he was charged with bribing a politician. He has denied this, stating that he “hates corruption”. The sentence was reduced to a mild fine in 2010. In the Panama Papers, his name appears as the owner of a company called “Excel Energy Trading Limited”, and this could provide a decisive hint. Gur did not respond to SZ’s request for comment.

As the 2013 corruption scandal was coming to light, the influence that AKP politicians and pro-government business leaders have over Turkey’s media landscape became clear.

Until 2013, Berat Albayrak – who also happens to be Erdoğan’s son in law – was CEO of a conglomerate that owned construction and energy companies, among other things. In 2015, he was elected to parliament with the AKP, and soon went on to become energy minister. Like many other companies, Çalık Holding also entered the media business. In 2008, the conglomerate purchased the ATV television network and Sabah, a Turkish newspaper. Within a very short time, the newspaper became the government’s mouthpiece. Sabah ATV was far from profitable, and Çalık generated a loss worth millions. But the network served a convenient purpose: outlets that broadcast positive reports about the government increase their chances of being awarded lucrative contracts.

In 2013, Kaylon Group took over Sabah ATV. The network is owned by the Kalyoncu brothers, who are said to have close ties to Erdoğan. The conglomerate was awarded the tender to turn Taksim plaza into a shopping paradise – the project that the Gezi protests were against. Kalyon is also involved in the building of Istanbul’s new airport.

In 2013, the public prosecutors who tried to investigate the corruption scandal also had a close look at the sale of Sabah ATV. Police wiretap transcripts that were eventually leaked appeared to document conversations between Erdoğan, the Kayloncu brothers, and Çalık boss Albayrak. According to investigators, Erdoğan created a “pool” of sorts, into which allied business people paid to finance troubled pro-government media. In exchange, they may have received favors in the form of public contracts. Since then, the term “pool media” has had negative connotations in Turkey.

Mehmet Cengiz, the man who allegedly made a threatening phone call to Cumhuriyet, and whose name appears in the Panama Papers, apparently also appears in the wiretap transcripts. In one spot, he is talking to a business partner about what would happen if plans to finance such pool media were made public.

The answer is now well known: no one was prosecuted.

Collaborator: Pelin Ünker