Friday, January 19 2007 @ 05:36 AM MSK
|Simmering resentments in Turkey's volatile press world have erupted into violent hostility, with historic rivals Sabah and Hürriyet accusing one another's owners of corruption on an epic scale.|
Sabah's editor-in-chief Fatih Altaylı fired the first shots in series of stories and signed editorials accusing Hürriyet's parent company Doğan Holding of being caught red-handed perpetrating "the biggest instance of tax evasion in the history of the republic."
He was referring to a Doğan-led consortium purchase in 2000 of a majority share in state-owned petrol station chain POAŞ for $1.26 billion. Through a relatively common practice outside Turkey known as a tax shield, the debt of the purchasing company was transferred to POAŞ itself, reducing the formerly profitable company's tax exposure to virtually nothing.
Sabah reported leaks, apparently from the government's own auditors, suggesting that POAŞ might owe anywhere up to $1-3 billion in back taxes. "It is an example of the media exercising its power to appropriate public resources," wrote Sabah columnist Ergun Babahan.
Hürriyet countered by defending the legality of the leveraged purchase of POAS -- a 34 percent share of which was sold last year to the Austrian group OMV. In a series of editorials penned by its own editor-in-chief Ertuğrul Özkök, Hürriyet said that the company had been restructured under the supervision of the Ministry of Finance. Mr Özkök also accused Turgay Ciner, Sabah's principal shareholder, of himself having a chequered relation with tax authorities.
Hürriyet has also called into question the ethics of Mr Ciner's initial acquisition of the then Sabah and ATV television station. It pointed a finger at Mr Ciner's Merkez Medya Group (MMG) for purchasing the paper in 2005 directly at a below-market rate without having to issue a competitive tender. Sabah was then under the control of the government Savings Deposit Insurance Fund (TMSF) when its sister company, Etibank, went under with $800 million worth of debt. Market analysts have repeatedly complained that Sabah -- a then publicly listed company -- was disposed of without regard for minority shareholders.
Doğan insiders believe that Turgay Ciner is trying to extract revenge for the Doğan's successful intervention to prevent MMG from trying to take Sabah shares to the pubic once again.
In a column (Jan. 12) titled "The new bully on the block," Ertuğrul Özkök accused Sabah of leading a "coalition of evil" consisting of those "addicted to ignorance and blackmail." He warned that Sabah might suffer the same curse as the Star media organizations while under the control of the Uzan family. Star's practice of blackening the name of companies which refused to place ads eventually rebounded when a bank also under Uzan control was discovered in 2003 to have had $6 billion worth of debt incurred in part through the fraudulent sale of non-existing securities.
The dispute is further complicated with many of those in the front lines have fought in the past on the side they are now attacking. Hürriyet, having accused Star newspaper of leading the slide into unprincipled journalism, has deployed Star's editor-in-chief, Fatih Çekirge, as a featured columnist in its own paper. By contrast Fatih Altaylı, the man at the head of Sabah, is himself a former Hürriyet columnist and once notorious for recklessly embroiling the paper in numerous libel actions.
Hürriyet shares and those of other Doğan companies have been hit hard by the dispute, at one point loosing up to 20 percent of their value. The drop also reflects concern that Hürriyet may be paying too high a price to diversify its interest abroad. The publisher recently announced its purchase of Trader Media East Ltd. for $500 million in cash in an effort to boost its classified advertising business in Eastern Europe, representing a 28 percent premium on the market price.
Analysts suggest the market is less concerned about the rights and wrongs of the Sabah dispute than at the prospect of more volatility in media shares during an election year. Sentiment is that the government may not be displeased to see its potential critics in the press tearing at each other's throats rather than at its own.
The current feud revives memories of the early 1990s when Hürriyet and Sabah fought each other bitterly for market share. Each paper backed its own candidate in the 1995 general election -- Sabah, the True Path Party, and Hürriyet, the Motherland Party -- and one view of that contest is that it was a proxy battle between the press barons themselves.
"I see no winners, only losers," a colleague in a rival newspaper told me about the dispute in which his own paper is currently embroiled. The fight between Sabah and Hurriyet centers on a bit tax law -- whether the newly privatized POAŞ acted improperly in writing off the finance costs of its own purchase. If the attack by Sabah newspaper have drawn blood, it is because they have prompted the senior editorial staff on a major Turkish newspaper to defend not their own conduct or the conduct of their paper, or a matter of national interest, but the financial interests of a totally unrelated company associated with their proprietor.
Another friend in another newspaper: "My colleagues and I are very concerned by what is taking place. Turkish journalism is already fighting for its own fragile credibility. Editors should conduct clean-cut journalism, not propaganda for their bosses. Period. Otherwise, all our reputations are going to suffer."
There should be no conspiracy of silence. Editors should not be afraid of illuminating the misdeeds of their competitors or anyone else for fear of being exposed themselves. By the same token, they should not go on the offensive in the spirit of "you asked for it!"