Muslim Wire

UPDATE 2-Turkey’s Dogan opens court cases against tax fine

Posted in Business by muslimwire on October 21, 2009

By Daren Butler

ISTANBUL, Oct 21 (Reuters) – Turkey’s largest media company Dogan Yayin on Wednesday took its multi-billion-dollar tax dispute with the government to a new stage with the opening of court cases challenging record fines.

Dogan, which has accused Prime Minister Tayyip Erdogan’s Islamist-rooted government of political persecution for its critical news coverage including graft allegations, has already opened cases to stop a collateral demand of $3.3 billion.

A day after authorities opened a second front against Dogan by accusing it of breaching a law limiting foreign ownership of Turkish companies, Dogan said some of its units had filed suits against the tax fine, which has raised concern about press freedoms in European Union candidate Turkey.

The company has also launched court cases to stop a preliminary injunction on assets of some of its units.

Erdogan rejects allegations the fine is politically motivated and has accused Dogan, which controls half of Turkey’s private media, of acting like an opposition party.

In an interview with Reuters financial television on Wednesday, Finance Minister Mehmet Simsek said the tax dispute was not politically motivated and that press freedom was not at risk in the Muslim country.

‘There is no question that (Dogan) is purely a tax case, not a political case, it is not (politically motivated),’ Simsek said, speaking on the sidelines of an investment conference in London.

The holding company’s CEO Nebil Ilseven told Reuters this week the case had political implications.

‘Our tax system, I am not going to pretend it is perfect … but there has been not a single change … that would imply this is a political case,’ Simsek said.

‘This is a purely technical case. This is not the first tax case but because it involves a media group, the risk is that it is blown out of proportion.’

Among Dogan’s media rivals are groups sympathetic to the government, including Calik Holding’s Sabah-ATV, whose chief executive is Erdogan’s son-in-law. Calik has denied receiving favourable treatment and says its media is independent.

PRESS FREEDOM

An EU report earlier this month suggested the ruling AK Party may be treating Dogan Yayin unfairly, but Simsek said: ‘Nobody should be worried about freedom of press in Turkey’.

On Tuesday, Turkey’s state media watchdog gave Dogan three months to comply with a law limiting foreign ownership of Turkish companies. Under Turkish law, foreigners cannot own more than a 25 percent stake in a private radio and television firm.

Dogan, which is co-owner with Time Warner of broadcaster CNN Turk and recently sold a 25 percent stake to German publisher Axel Springer, says it does not know how the government reached the conclusion it had breached the law on foreign ownership.

Critics say Turkey’s tax code is ambiguous and open to interpretation and that the government wants to get rid of an uncomfortable critic ahead of general elections due in 2011.

The fine has drawn parallels with Russia’s treatment of oil giant Yukos, which was crippled by a huge tax bill its owners said was politically motivated, undermining the country’s investment climate.

Aydin Dogan has been accused of using his media outlet to further his business interests and campaign against Erdogan, suspected by secularists of harbouring an Islamist agenda.

(Additional reporting by Sujata Rao and Darcy Lambton in London, Alexandra Hudson in Istanbul and Selcuk Gokoluk in Ankara; editing by Andrew Roche) Keywords: DOGAN/TAX

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