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C O N F I D E N T I A L SECTION 01 OF 02 ANKARA 001643

SIPDIS

DEPARTMENT ALSO FOR EUR/SE (GARBE)

E.O. 12958: DECL: 09/12/2018
TAGS: PGOV SCUL TU
SUBJECT: TURKEY: CHARITY FUND SCANDAL PROMPTS PM ERDOGAN
BATTLE WITH PRESS TYCOON

REF: ANKARA 1626 

Classified By: POL Counselor Daniel O'Grady, reasons 1.4 (b,d)

¶1. (C) SUMMARY. A very public and ugly battle has erupted between Prime Minister Erdogan and the Dogan Group. The conflict dominated the news this week after Erdogan lashed out at business and media mogul Aydin Dogan for reporting on allegations in a German court that the German-based Deniz Feneri Charity laundered funds to individuals in Turkey who are close to Erdogan and the ruling Justice and Development Party (AKP). The charges focus public attention on widespread allegations about corruption in the AKP, a key vulnerability for the party. Still, Erdogan seems indifferent to reporting on the scandal in other media outlets, and has turned his wrath solely on the Dogan Group with competing charges about corruption linked to a zoning deal for the Istanbul Hilton. Erdogan launched a milder campaign against the Dogan group in Febuary for carrying “pornographic” photos of women on its front pages, but the latest attack is a significant escalation of tensions. Erdogan has not been this truculent since long before the AKP court closure case; ironically, the new scandal has fed speculation that a second closure case could result. END summary.

It Only Took A Spark
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¶2. (SBU) On September 1 the first court case against Deniz Feneri convened in the Frankfurt Regional Court. By September 5, German Prosecutor Kerstin Lotz publicly stated that the Turkish Government “tried to intervene in the case and wanted suspects released.” The next day, CHP leader Deniz Baykal announced on NTV, a non-Dogan media outlet, that “Mehmet Gurhan, International Director at Kanal 7, acknowledged he took money from the German Deniz Feneri and passed it to PM Erdogan.” Baykal implied that he Prime Minister and his party were direct recipients of funds embezzled from the charity. Dogan's three flagship papers – Hurriyet, Milliyet, and Radikal – quickly picked up the story the next day with screaming, front-page banner headlines.

¶3. (U) In response, Erdogan publicly charged Dogan with corruption regarding a zoning application for new residences at the Istanbul Hilton. Dogan responded to the allegation by declaring: “The German judiciary claimed that the Prime Minister was involved in this case. The main opposition party leader announced this on NTV, but I am having difficulty understanding why I stand accused of reporting this in my papers.” In a second attack, the Prime Minister announced that Dogan had not been granted permission by the Turkish Board of Television and Radio (RTUK) to use an additional TV terrestrial frequency that he had purchased. Dogan denied Erdogan's charges and accused the Prime Minister of trying to stifle any press criticism of himself.

Tango with Turkey's Rupert Murdoch
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¶4. (C) Dogan Media Holdings owns several mainstream daily newspapers and three major television stations. Although relations between Erdogan and Dogan have never been particularly warm, a detente of sorts has existed for most of the Erdogan administration. Dogan media players were only moderately critical of the Government, and the Goverment did not put undue pressure on Dogan's other business interests. Long before the public barbs, a familiar behind-the-scenes tango was taking place. Because of the Turkish media ownership structure, media owners use their press resources to curry favor with the Government on behalf of their own businesses. They also punish governments that, in their view, do not give them a sufficient cut of Government largesse. With control of 30-40 percent of the nation's media, Dogan is a major player in this game. Two years ago, the goverment fined Dogan's Petrol Offisi $200 million for tax evasion. This appears to have been the spark that ignited the current tensions.

Erdogan Spokesman on the Media: Feed the Beast or Else

Ankara 00001643 002 of 002

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¶5. (C) PM Spokesman Akif Beki contends, “It's a media habit. They want something; they don't get it, so they attack.” He defended RTUK's refusal to allow Dogan to use his recently purchased terrestrial television channel by arguing that this station would have put Dogan in control of more than 50 percent of the media. Beki also believes this fight will not last long. “Dogan is wrong,” he argued, because he is “printing allegations being adjudicated in a German court as (if they are) pure truth.” AKP Vice Chairman Nihat Ergun made the same point to us in a September 11 meeting at the Parliament. (COMMENT: Although Beki contends that Erdogan's criticism is justifed and that the Prime Minister has actually shown admirable restraint, there are suggestions of a deliberate political move against Dogan. Several weeks ago, Minister of Trade Simsek told a group of investors in London to sell their Dogan stock because Dogan “won't be around much longer.” END COMMENT) Indeed, after Erdogan's attacks began last week, Dogan stock fell 8 percent. And although Dogan Holding showed a profit last year, several media and business sources have indicated the lack of government tenders and contracts is beginning to hurt the massive conglomerate.

¶6. (SBU) Last fall the editorial stance noticeably shifted at Dogan's flagship newspaper, Hurriyet. The paper became more critical of the government. xxxxx described for us several factors which he said led to the shift. Among them was the Petrol Offisi case, a decision by the Government not to issue a valuable Ceyhan oil refinery tender to Dogan, and a blistering speech Erdogan made to a closed AK Party meeting where he called Dogan a crooked businessman. The last item was taken personally by xxxxx because Dogan has supported Erdogan in his press on certain issues in the past.

Comment
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¶7. (C) This battle could be seen as just a very direct and personal fight between two titans. However, coming on the heels of other recent accusations of corruption in the AKP, the Dogan attacks may represent a broader shift in Government-media relations. Such shifts have been seen with other governments in the past. In earlier cases, however, the media did not generally escalate attacks until a government appeared at the end of its life, like sharks smelling blood in the water. With Erdogan's approval ratings still over 50 percent, it will be difficult to maintain such a criticism level absent hard evidence and actual convictions. Still, only six weeks after the conclusion of the AKP closure case, it is striking that media coverage is predicting the AKP could face closure again if these or additional corruption charges are substantiated.

Visit Ankara's Classified Web Site at http://www.intelink.sgov.gov/wiki/Portal:Turk ey

Wilson