TURKEY: AMBASSADOR PRODS D/PM ON DOGAN MEDIA FINE

C O N F I D E N T I A L SECTION 01 OF 02 ANKARA 001497

SIPDIS

DEPARTMENT ALSO FOR EUR/SE

E.O. 12958: DECL: 10/15/2019
TAGS: PHUM PGOV TU
SUBJECT: TURKEY: AMBASSADOR PRODS D/PM ON DOGAN MEDIA FINE

REF: A. ANKARA 1425

B. ANKARA 1327

Classified By: DCM Douglas Silliman for reasons 1.4 (b,d)


1. (C) SUMMARY. In an October 14 discussion with the
Ambassador, Deputy PM Arinc defended the tax evasion fine
against the Dogan Media Group as simply a move by GOT
auditing agencies to tackle the unregistered economy and
eliminate "off-record" dealings. He portrayed Dogan as a
powerful corporate entity long accustomed to using its
considerable political leverage, but noted that in his view
the GOT had made a mistake in pursuing Dogan's tax
liabilities because "politicians should not be openly feuding
with the media." He was confident the Finance Ministry would
offer Dogan a payment deal. END SUMMARY.


2. (C) On October 14 the Ambassador hosted a lunch for
Deputy Prime Minister Bulent Arinc and used the opportunity
to underscore USG concerns about the massive fine which GOT
tax authorities have levied against the Dogan Media Group
(REFTELS). The Ambassador said the technical details of the
alleged tax evasion case against Dogan are a legal issue that
is best left to the judicial system, but that the size of the
fine itself has created a worrisome impression about press
freedom in Turkey. Whatever the GOT's actual intentions, he
said, the appearance is negative. He noted that the recent
EU report had called for proportionality and fairness in such
tax cases, to avoid undermining the economic viability of the
Dogan Group and curbing press freedom in practice.


3. (C) Arinc replied at length, first describing Dogan Media
Group as a "very large" and powerful entity with a wide range
of corporate activities, from petrol stations to newspapers.
It has exerted considerable political leverage and, after
helping to install Mesut Yilmaz as Prime Minister in the
mid-1990s, has acted as if it could make or break any Turkish
Government, he said. Aydin Dogan had openly challenged PM
Erdogan last November. He had threatened to disclose
"certain documents." Dogan's daughter, TUSIAD President
Arzuhan Yalcindag, had also attacked PM Erdogan, comparing
him to Russian President Putin and alleging that there are no
press freedoms in Turkey.


4. (C) Arinc contended that the main problem, however, as
reflected in the Dogan case, is the unregistered economy and
the need to eliminate "off-record" dealings. In addition to
the Ministry of Finance, he said, Turkey has supervisory and
auditing agencies, which regularly carry out audits and can
initiate investigations on their own, or upon receiving
complaints. These agencies draw up a report and present it
to the taxpayer who is being examined. The taxpayer then
either accepts the allegation or tries to come to a
negotiated agreement with the Ministry of Finance. The
Ministry may decide to offer a "discount" of up to one-third
of the fine. Or the taxpayer may appeal to the Council of
State (Danistay) or the relevant tax court. However, in
order to make an appeal at the court, the taxpayer must first
make a deposit -- which is a set percentage of the original
fine. This is what is proving to be a problem for the Dogan
group.


5. (C) Still, Arinc added, in his view the Government "had
made a mistake" in pursuing Dogan. "Politicians should not
be openly feuding with the media." He remembered a saying
from his service in the military: there are eggs and there
are hammers; when the hammer hits the eggs, the hammer never
gets hurt. The media could be considered as a hammer. Arinc
said the Government would "patch things up" with Dogan. The
Government's conscience would not allow it to annihilate such
a big group. He was confident the Finance Ministry would
offer Dogan an option. "This has been a bitter experience
for us," he said. "We should not have reciprocated their
disgraceful attitude."


6. (C) COMMENT: Arinc's depiction of the Dogan Media Group
as a political powerhouse that had "challenged" PM Erdogan
provides some insight into how AKP views the media
conglomerate -- as the enemy -- and seems to lend credence,
inadvertently, to assertions that this is more than just a
tax evasion case. He also seems to imply that the initial
fine was levied with the understanding that it would be
eventually negotiated downward, and that the GOT is now
amenable to making a deal. The continuing clamor over the
Dogan case and its press freedom implications may have
convinced the ruling AKP that the case has become more of a
liability than it envisioned, and that it is time to move on.

JEFFREY

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