The richest guy in Turkey is in a huge mess.
Mehmet Emin Karamehmet, who is worth $4 billion and oversees Cukurova Holding AS — which owns TV satellite company Digiturk and the country’s biggest cell phone company, Turkcell — is fighting off a prison sentence and trying to keep control over his many companies, reports the Wall Street Journal.
For one, he’s fighting a 12-year sentence for fraud over a Cukurova-owned bank collapsing during Turkey’s 2001 financial crisis. When the government took over Pamukbank in 2002, it gave Cukurova 15 years to pay back $6 million in losses. It was a controversial takeover, allegedly based on non-performing loans.
To create more cash flow, Karamehmet sold major stakes in Turkcell — an $11.5 billion company — to Swedish and Russian shareholders with TeliaSonera and Altimo companies, respectively. But he’s been battling them for years to make sure they don’t completely overtake the company.
He didn’t help his reputation when, in May, he and a partner “placed winning bids of more than $6 billion for electricity-distribution networks at a May government auction” — but never paid up, reports the Journal. “Within days, the government froze $1 billion of Cukurova’s assets as collateral for alleged unpaid taxes.” Karamehmet calls it one of his biggest mistakes.
Even so, he’s involved in a lucrative joint venture, Genel Energy, with BP’s former chief executive, Tony Hayward, whose investment company Vallares just put in $2.1 billion to buy oil and gas assets in Northern Iraq.
This guy is different from traditional tycoons from Istanbol. He’s a recluse, drives his own Renault car, and doesn’t go to parties. And according to the Journal, a few years ago the U.S. embassy advised Americans against doing business with him, and says that Karamehmet and other leading Turkish businesses all share the same problem: bad governance.
“As investors look to bet on an economy that is forecast to expand between 7% and 8% this year, the modernization of corporate governance and how Turkey treats foreign shareholders increasingly are in the spotlight.”
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