ISTANBUL, Turkey — Any normal business would tremble in the face of a $2.5 billion tax fine. But in the case of Dogan Yayin, Turkey’s largest media corporation, most are betting that more is going on than just a simple case of tax delinquency.
The powerful media group owns more than half of the country’s newspapers and two major TV stations, including CNN-Turk. Over the past several years they have emerged as the most vocal critics of the ruling Justice and Development Party (AKP) — making it all the more suspicious that the government has levied a tax penalty on the group equal to the value of the entire company.
On Nov. 24, Dogan Yayin will meet with Finance Ministry officials to discuss a possible settlement to the fine, which has raised concerns about freedom of the press in Turkey.
This week, in the face of the fine, Aydin Dogan announced the sale of five of his newspapers — Milliyet, Vatan, Posta, Radikal and Fanati — to Germany's Axel Springer, leaving the group with only the Hurriyet newspaper, alongside its television and other media interests.
The battle between Dogan Yayin and the Turkish authorities reached new heights this September when Dogan was notified that the fine, already record-breaking, had been increased to an astonishing $3.3 billion, leading many to argue that the government is now trying to literally tax the group to death.
As penalties mount, the case has increasingly drawn international criticism at a crucial moment in Turkey’s effort to join the European Union.
The fine comes just months after an initial $500 million tax penalty leveled against Dogan. According to Turkish tax officials, Dogan engaged in deceptive practices and failed to pay tax on income earned through the sale of a company and the transfer of shares between companies within the group itself. Then, in April, Ankara banned Dogan companies from bidding on government contracts.
Dogan Yayin, meanwhile, has accused the government of singling it out and twisting the country’s financial rules to suit its political purposes.
For many observers the whopping penalty looks, and feels, like an assault on the freedom of the press.
“The most recent tax fine … is a transparent assault on freedom of the press. It is also an existential threat directed at the Hurriyet Daily News & Economic Review, a member of the Dogan Media Group,” wrote David Judson, Editor-in-Chief of the Hurriyet Daily News, on a special page of Hurriyet’s website dedicated to covering “all sides of this still-unfolding drama.”
There is a sense of apprehension that the fine could have a tempering effect on newspaper publishers and journalists. Already Sedat Ergin, the editor-in-chief at leading Dogan daily Milliyet and an outspoken critic of the ruling AKP, has stepped down, Dogan Yayin said on Monday.
"Milliyet has been very critical of the government and that is likely to be toned down now with Ergin gone," said a senior Dogan editor, who declined to be named, in an interview with Reuters.
Criticism of the fines have also come from several international organizations, with the press right’s group Reporters Without Border’s listing Turkey as having “noticeable problems” even before the latest drama unfolded.
The Switzerland-based Association for the Promotion of the International Circulation of the Press, or Distipress, in a letter to Prime Minister Recep Tayyip Erdogan, said the tax fines against Dogan Yayin targeted press freedom.
This is not the first time the AKP have been accused on having an intolerant attitude toward dissent. Just three days after the fine against the Dogan group was announced, the military said it was taking legal action against a journalist of the Turkish daily Taraf for a report published this June.
Less than one month earlier, courts in Istanbul closed down two small pro-Kurdish newspapers, Gunluk and Ozgur Ortam, for a month after alleging they published propaganda of the Kurdistan Workers’ Party, or PKK, a Kurdish rebel group that has been fighting for Kurdish autonomy since 1984.
The current standoff between Erdogan and 73-year-old Aydin Dogan, often called the Rupert Murdoch of Turkey, has been brewing for more than a year. In early 2008, Dogan Yayin was the first to report on a corruption case into a Turkish charity in Germany that had unearthed evidence that pro-government media in Turkey, and even Erdogan’s government, may have benefited from an illegal transfer of money collected in Germany.
Erdogan responded to the allegations by saying, "We are not elected by the media, but by the country… Don't buy these newspapers, they are full of filth and lies."
“It is a domestic quarrel between two very powerful people, with a lot of interests at stake,” said Hugh Pope, a Turkey analyst with the Brussels-based International Crisis Group.
For a domestic quarrel, however, there is an awful lot at stake. As part of its pitch to Europe, Turkey needs to sell itself as a fully functioning democracy, with a free and independent press. While the country has been showing tentative signs of getting back on the EU-bound track, attacking newspaper owners and intimidating journalists isn’t the way to go.
Executives of the European Union, which has been considering the addition of Turkey to its powerful group, quickly noted their concern.
“When the sanction is of such magnitude that it threatens the very existence of an entire press group, like in this case, then freedom of the press is at stake,” a spokesman said.