Page 93 - TURKRptSept19

owned land but instead built much more lucrative private residential apartments. The UK daily said Oyak declined to comment.
Oyak sid on August 16 that it signed a provisional agreement to takeover British Steel.
British Steel has production plants in the UK, Netherlands and France.
Who’s behind the proposed Turkish buyer of British Steel? Oyak, with £15bn of assets and 30,000 employees, is to buy the stricken company for £70m. It beat off competition from Liberty House, a UK-based metals company, by proposing £900m of investment to double production at Scunthorpe Steelworks. The plant is one of the oldest steelworks in the country and a key local employer. Oyak’s plan would rescue 4,000 local jobs at the steelworks. What do we know about the secretive pension fund and the political impetus behind the deal?
Background. Oyak was established in the aftermath of the 1960 military coup in Turkey—primarily to help support the long underfunded Turkish military. An unintended consequence was that it started integrating the military elite into the capitalist system Turkey was gradually adopting, a process that has continued to this day. In many ways, Oyak has been a success story. It has grown exponentially, benefiting from extensive tax exemptions and other protections. The fund partnered with Renault in 1971 to set up a joint venture and bought 49% of Turkish steel producer Erdemir in 2005. Historically, Oyak has been apolitical, but broadly aligned with the country’s traditionally powerful and secular military. It quietly accumulated an expansive portfolio of assets while skilfully adapting to macroeconomic conditions and navigating Turkey’s volatile political climate.
Politicisation of Oyak. For many years, Oyak resisted pressure from then- prime minister Recep Tayyip Erdogan, whose allies were increasingly replacing traditional big players of the Turkish economy. In 2012, Huseyin Celik, spokesman for Erdogan’s ruling Justice and Development Party (AKP), announced that the government would take a closer look at the fund. His statement came in the midst of the government’s all-out political war against the military in conjunction with its then-allies in the Gulen movement. Erdogan and the movement’s leader, Fethullah Gulen, later fell out but evidence used in trials to prosecute top military officers of the country was proven to be fabricated, most likely by Gulen sympathisers. The Turkish government’s efforts to assert its control over Oyak only came to fruition in May 2016, when the fund saw a sudden change in its top leadership. President of the board Omer Necati Ozbahadir and general manager Coskun Ulusoy—who had been at the helm for 16 years—as well as four deputy managers abruptly resigned from their posts. Within days, Suleyman Savas Erdem, an ally of Erdogan who has served as an auditor at different departments under the prime minister’s office but is without any experience in the private sector, replaced Ulusoy as general manager. Erdem’s appointment was greeted with scepticism. Opposition politicians highlighted his time at the Housing Development Association (TOKI), through which then-MP Erdogan Bayraktar was allegedly embezzling funds. Bayraktar, who ultimately resigned in December 2013 alongside other MPs following leaks, was shielded by Erdem himself when opposition MP Tacidar Seyhan called for an investigation into misappropriation of funds at TOKI in 2006.
The 2016 shake-up in Oyak’s management was widely seen as a sign of the ruling AKP finally getting its hands on a crucial Turkish asset. The government had already expanded its influence over the central bank and the courts, while its allies came to dominate much of the construction and heavy industry sectors. However, they had struggled to break into banking and finance. In a successful manoeuvre, Erdogan has inserted a loyalist into the top job of one of Turkey’s biggest asset management operations.
Implications for British Steel. British Steel is now an unloved and largely
93 TURKEY Country Report September 2019 www.intellinews.com