Turkey Sees Foes at Work in Gold Mines, Cafes and ‘Smurf Village’

Akin Ipek, one of Turkey’s richest men, was staying in the Park Tower Hotel in London when the police raided his television network in Istanbul. The raid was national news, so Mr. Ipek opened his laptop and watched an unnerving spectacle: an attack on his multibillion-dollar empire, in real time.

It was an oddly cinematic showdown. Through a combination of shouting and persuasion, the network’s news editor convinced the officers that they should leave, then locked himself in the basement control room with a film crew. For the next seven and a half hours, until the police returned, the news editor spoke into a camera and took calls on his iPhone. One was from Mr. Ipek, who denounced the government’s action as illegal.

“I was shocked and angry,” Mr. Ipek said in a recent interview in London. “But I thought they would leave after a couple days. There was no reason to stay.”

Actually, the government never left, and the events were the start of a personal cataclysm for Mr. Ipek. His station, Bugun TV, was taken off the air a few hours after that phone call, on Oct. 28, 2015. His entire conglomerate of 22 companies, Koza Ipek, is now owned and operated by the state.

The episode proved to be a dry run for a nationwide series of confiscations that began soon after an attempt to overthrow the government of President Recep Tayyip Erdogan on July 15 last year. Since then, more than 950 companies have been expropriated, all of them purportedly linked to Fethullah Gulen, the Muslim cleric who Turkish leaders say masterminded the putsch.

About $11 billion worth of corporate assets — from small baklava chains to large publicly traded conglomerates — have been grabbed by the government, a systematic taking with few precedents in modern economic history. Several thousand dispossessed executives have fled overseas to cities as far-flung as Nashville and Helsinki. The less fortunate were imprisoned, part of a mass incarceration campaign that has included purged members of the military, judiciary, police and news media, adding 50,000 new inmates to the prisons.

Turkey was once considered one of the world’s great emerging markets, with years of torrid growth and an Islamic government that embraced democracy. Tourism boomed and hundreds of malls popped up across the country. Starbucks arrived in 2003 and has since opened hundreds of stores.

But the political and financial are deeply entwined in Turkey, and the fallout from the coup attempt has damaged the economy. The corporate seizures have also changed the way the country is perceived in the international business sphere, largely because of what they say about the leadership.

The Turkish lira is crumbling and foreign investment has dropped by half compared with last year. All three of the major rating agencies have downgraded the government’s debt to junk status, citing among other factors the bludgeoning approach to companies suspected of having ties to the Gulen movement.

“We’ve seen this new narrative about Turkey as it has taken an authoritarian turn,” said Jonathan Friedman of Stroz Friedberg, a global risk consultancy. “In boardrooms, the country is now a very hard sell.”

Turkey’s war on its “enemies” in business — and the evolution of Mr. Ipek from revered industrialist to public villain — illuminates much about the tumultuous events that have so jolted the country in recent years.

Mr. Ipek stands accused of being part of a treasonous deep state run by Mr. Gulen, a reclusive 76-year-old who fled Turkey in 1999 and now lives in the Poconos of Pennsylvania.

For decades, Mr. Gulen has preached a theology rooted in Islam and focused on peace, science and democracy. The movement he leads is called Hizmet — service, in English — and is best known outside of Turkey for building schools across the country and the rest of the world, including 120 charter schools in the United States. Delegations of American politicians have flown to Turkey on trips paid for by Hizmet.

To Mr. Gulen’s detractors, his good works have all been all a cunning charade, propaganda camouflaging a vast moneymaking enterprise that sought to overthrow the government. He and his followers indoctrinated youngsters at Hizmet schools in Turkey, then encouraged them to find positions in the government, particularly the justice system — as police officers, prosecutors and judges.

For allies in the corporate realm, Gulenists in the government provided invaluable aid. Licenses were approved, permits issued, rivals thwarted. Entrepreneurs in Mr. Gulen’s favor knew that the levers of the state could make them wealthy, and one of his most successful protégés, if the Turkish government is correct, was Mr. Ipek.

Soon after the raid, a warrant was issued for Mr. Ipek’s arrest, stating that he laundered vast sums for what officials call the Fethullah Terrorist Organization. His assets were frozen and have gradually been seized, starting last year with his luxury cars and ending with all of his real estate and bank accounts. Prosecutors announced in June that they would seek a 77-year prison sentence for Mr. Ipek, though he has no plans to return to Turkey.

Now settled in London, Mr. Ipek spends his days trying to clear his name and somehow reclaim his life. No, he says, he is not a financial backer of Mr. Gulen or a beneficiary of favors from his followers. And no, he says, he didn’t flee Turkey with billions of dollars, as the government has charged. He says his current net worth is less than $10 million.

“I have not committed one single crime in my life, not a traffic penalty,” he fumed, during hours of interviews.

It isn’t easy to sort fact from fabrication in the government’s case, and parts of Mr. Ipek’s account of his own life sound nearly as far-fetched. Truth is a slippery, elusive concept in today’s Turkey, a place where the definitions of basic words, like “ally” and “traitor,” keep changing.

At least one allegation against Mr. Ipek is demonstrably absurd. A judge misconstrued a reference to “smurfs,” a term of art for people who launder tiny amounts of money, in a report by a government investigator. Taking the allusion literally, the judge, in his ruling, wrote that Mr. Ipek and a group of others conspired in “Smurf Village” in Ankara.

“For two years I’ve been trying to prove there is no Smurf Village in Ankara,” Mr. Ipek nearly shouted, “because some idiot mentioned Smurfs in a report.”

‘An Exceptional Person’

A fit-looking 53-year-old, Mr. Ipek speaks English learned, in part, as an undergraduate in Britain. A black belt in taekwondo and formerly an exercise addict, he has given up workouts since moving to London and has a pack-a-day cigarette habit. He shaved off the mustache he long wore in Turkey, an act with political overtones given that mustaches are de rigueur in Mr. Erdogan’s Justice and Development Party, shortened to A.K.P. in Turkey.

“They copied me,” he said of the A.K.P.’s mustachioed members. “After they saw my mustache, they got jealous and started growing their own.”

He paused a moment, smiled, then added, “That is a joke.”

On some level, it’s not. Mr. Ipek has an ego just healthy enough to believe that he could be a facial-hair trendsetter. He described a luxury hotel he built as “the world’s best hotel” and the oil he discovered in a southeast province as “the best oil in Turkey.” He called Koza Ipek a “perfect company.”

“I’m an exceptional person,” he said, matter of factly.

He is also warm and surprisingly unbowed, given the circumstances. He leads a somewhat monastic life compared with his recent years in Turkey, when he flew on the company’s jet. He doesn’t travel anymore, though he lives comfortably enough in a house owned by his company in central London.

If anyone aided him on his path to riches, he says, it was his father, Ali Ipek, not Mr. Gulen. The elder Mr. Ipek ran a successful greeting card business, with 500 employees and contracts with Hallmark and others. Akin Ipek took over the company when his father died in 1997 and eventually looked for new opportunities with bigger upsides. He bought a silver mine, then a gold mine.

It seems like an improbable jump. But when you point that out to Mr. Ipek, he is unfazed. “It was something I could afford,” he said, referring to his first acquisition. “There are a lot of small mines in Turkey. It cost $1 million.”

He went into the media business in 2005, buying the Bugun newspaper. It was a natural step, he said, because environmentalists had raised objections to some of his mining operations and he wanted to get out his side of the story.

“In mining, you need to explain what you are doing, you need to be transparent,” he said. “I thought that instead of spending money on P.R., I would buy a newspaper.”

In 2008, he purchased Kanalturk, his first TV network. As a rising media baron, he was contacted and sometimes summoned by Mr. Erdogan. Twice he asked Mr. Ipek to buy other newspapers, deals that didn’t work out.

“He didn’t mind, he wasn’t angry,” Mr. Ipek recalls. “I liked him very much. I saw him as a very reasonable, very logical person. He was trying to do what was right for the country — trying to join the European Union, talking about human rights.”

In less than 15 years, Mr. Ipek had gone from a greeting card wholesaler to a billionaire tapped for favors by the country’s most powerful leader. It was a dizzyingly fast ride, one he says was engineered by a “100 percent self-made man.”

A Toxic Liability

But there is another version of Mr. Ipek’s life, a counternarrative from people who knew him or followed his career. It starts with an irony: Mr. Ipek’s ascent was made possible by the 2003 election to the prime ministership of the man who would become his nemesis, Mr. Erdogan.

Until then, Turkey had for decades been controlled by a secular elite backed by the military, collectively known as Kemalists. Suddenly, a conservative Muslim was the prime minister, and he badly needed to replace Kemalists with bureaucrats, judges and police officers loyal to the new administration.

Mr. Erdogan struck an alliance with Mr. Gulen — then regarded not as a rival but as a conservative Muslim with highly educated acolytes. Gulenists slowly began to take jobs in the government. In effect, a new deep state replaced the old one.

Businessmen in the good graces of the Erdogan-Gulen entente were marked for greatness. Turkey was entering its expansionary era, and those with the right connections prospered. Mr. Ipek appears to have been one of the period’s biggest winners, starting with the 2005 purchase of the Ovacik gold mine.

The mine had been closed by a court decision in 2004, a rare success for Turkey’s environmentalists, who denounced what they considered an excessive use of cyanide in the extraction process. To the chagrin of residents and activists, the mine was reopened not long after Mr. Ipek collected signatures from nearly a dozen ministries, which he did at what one news report called “jet speed.”

A few weeks later, locals and environmental activists were physically attacked by Koza Ipek miners during a protest march. Videotape showed Mr. Ipek at the scene of the assault, and former Koza employees said that he had helped orchestrate the violence. He denies that. A lawsuit against the company went nowhere.

“Although we filed a complaint right after the attack,” said Arif Cangi, a lawyer for the plaintiffs, “prosecutors waited for four and a half years to open the case, and they still haven’t made a decision.”

Only the anointed few, observers say, had this kind of regulatory and legal assistance from the state. And an ambitious executive needed a close relationship with Mr. Gulen, along with a willingness to help underwrite his movement, estimated to be worth at least $15 billion at its peak.

“What I heard from people in business that I know is, ‘Never get in a fight with a Gulenist company,’” said James F. Jeffrey, a former American ambassador to Turkey. “‘They’ll get the case in front of Gulenist judges and you’ll lose no matter what the facts are.’”

Being associated with Mr. Gulen eventually became a toxic liability. By 2009, Mr. Erdogan began to suspect that Mr. Gulen wanted to return and run the country.

Initially, the strongest evidence came from leaked sermons, including one in which Mr. Gulen urged his followers to “move in the veins of the system, without anyone noticing your existence, until you reach all the power centers.” Once ensconced, he went on, wait “until you have brought to your side all the power of the constitutional institutions in Turkey.”

Those closest to Mr. Gulen say these exhortations, and his conniving, were no surprise.

“He is a wolf dressed as Little Red Riding Hood,” said Huseyin Gulerce, a former editor in chief of Zaman, the country’s most prominent Gulenist newspaper. “He is obsessed with the idea that he is going to rule the world.”

Suspicions about Mr. Gulen hardened fatefully when a clique of Gulenist police officers, prosecutors and judges began a series of corruption investigations targeting Erdogan loyalists, culminating in late 2013 with accusations of corruption against Mr. Erdogan’s son. After that, the two forces were openly clashing.

It was soon clear that businessmen had to choose a side. One school of thought has it that when hostilities began, Mr. Ipek’s fortunes were too interlaced with Mr. Gulen’s for him to break free.

Mr. Ipek says that’s preposterous. He says that he opened the Ovacik mine through determination and the merits of his arguments. While he acknowledges that he visited Mr. Gulen in the Poconos “five or six times, maybe,” he forswears any emotional or financial link to the man.

Time and again, he contended that the Gulenists never constituted a deep state. Few who study Turkey believe that, other than Gulenists. And his claim to be merely an admirer of Mr. Gulen’s was undermined in late 2015 when Mr. Gulen was heard in one of his sermons, regularly uploaded to a website, describing Mr. Ipek as “an angel” and one of 1,000 men in Turkey who will enter heaven with no questions asked.

Of course, even if Mr. Ipek was one of Mr. Gulen’s truest believers, taking companies with scant due process would seem to violate most countries’ legal norms. Many inside and outside Turkey believe that Mr. Erdogan has exploited the failed coup as a pretext to expand his power, tossing people in prison or firing them from jobs for sins as minor as keeping money in a Gulen-connected bank. More than 130,000 people have been suspended or dismissed in the past year, and dozens of hospitals have been closed, along with 1,200 schools and 15 universities.

Mr. Ipek may simply have experienced the wrath of the president before everyone else. During their last face-to-face meeting, in 2012, Mr. Erdogan smoldered while reading aloud every word of a column in Bugun, Mr. Ipek’s newspaper, that he found objectionable

“He was not reasonable anymore,” Mr. Ipek said. “I told him, ‘Consider me your younger brother and let me tell you some truths. You need to look at the whole wall, not concentrate on one brick. I’ll ask my columnists to be a little more polite, but we want people to be free to express their opinion. We promised them a free press.’”

Mr. Ipek must have realized that his future in Turkey was not secure. In late 2014, he began the process of relocating to London, forming a holding company here called Ipek Investments that would control all of his assets.

The leverage that the government now has over Mr. Ipek includes his younger brother, Tekin, who was imprisoned two years ago without a trial. Mr. Ipek has offered to fly to Turkey and take his brother’s place if the government releases him. Come to Turkey and we’ll talk, the government has countered, in Mr. Ipek’s telling. It is a proposal that he has declined, because he assumes that the government will simply imprison them both.

“I’ve seen them do that before,” he said.

Taking Over

Finding a government official to speak about the business seizures was not easy. After many phone calls, a high-ranking adviser to Mr. Erdogan agreed to an interview at his office in the presidential complex in Ankara. Opened in 2014, the site has3.2 million square feet of inhumanely scaled buildings — imagine an Ottoman-themed Las Vegas casino, minus the neon and noise. This is where the president lives, and the immaculate premises contain more than 1,000 rooms, many filled with government employees.

To reach their offices, you need to pass through two metal detectors and drive through underground tunnels, then pass through another metal detector. Everything is large, silent and under tight security. It’s like visiting the world’s grandest above-ground bunker.

The high-ranking official turned out to be a friendly man who, through a translator, opened by conveying the conditions of the interview: No one else, he said, could be quoted in the article. When I declined that offer, he had another idea. He would provide names of other sources who could be quoted. When I said that wouldn’t work either, he explained that he could not appear in an article that contained negative sentiments about Turkey.

When that offer was also rejected, he agreed to share his thoughts only if his name was kept from the story and he was referred to as a “high-ranking official.”

This pre-interview conversation revealed a lot about the current state of mind of the country’s governing party. The high-ranking official wasn’t just setting these terms because he had little use for independent journalism, though he clearly preferred the pliant variety. He was setting those terms out of fear.

“Don’t get me in trouble,” he said several times, with a forced smile. Turkey is now a place where even those in power fret that a false step will harm their careers.

“It was a market-friendly thing that these companies were seized,” he said. “We cleansed the economy of criminal companies.”

“International investors aren’t asking if Turkey is safe to invest in,” he added. “Only journalists are asking.”

What about the downgrades by the ratings agencies?

Their opinions are subjective and unfair to Turkey’s brand, he said, noting that companies like Citigroup and Boeing are investing huge sums in the country. He predicted that gross domestic product would grow by 7 percent in 2018.

He referred questions about the 950 seized companies to the Savings Deposit Insurance Fund, the agency that now controls them. In an earlier incarnation, the agency’s mandate was to auction off insolvent companies, which it often did live on television, making the sales both transparent and public.

Now, the agency has gone silent. It did not return calls for comment.

Learning anything about the current state of a seized company often requires a visit.

In many cases, the agency has simply cleared out the corner offices and relied on existing employees. That is true of Aydinli, a seized clothing giant that markets U.S. Polo Assn. and a variety of other brands.

“The only change is we’re getting our paychecks earlier,” said a salesman at a U.S. Polo Assn. store at a mall in Istanbul. The flow of customers has held steady.

David Cummings, the chief executive of U.S.P.A. Global Licensing, the West Palm Beach, Fla., company that markets U.S. Polo Assn. clothing, said that aside from a new government-appointed board to oversee Aydinli’s day-to-day operations, nothing had changed. “Of course, everyone gets a little nervous when the government exerts that kind of control,” he said in a phone interview. But the company, he said, has continued to expand.

Similar business-as-usual sentiments were heard from a manager at the seized baklava chain, Faruk Gulluoglu, in Taksim Square in Istanbul. It was packed on a recent sunny day, and whoever is running the company’s Twitter account has gone out of the way to say that it hasn’t changed the recipes.

After the Sweep

Still, critics say that many companies have been sold at deep discounts to friends of Mr. Erdogan, and that others are now run by incompetent loyalists. Inevitably, there have been glitches.

After a major construction company called Dumankaya Insaat was seized, work on a number of unfinished apartment complexes came to a halt, leaving some 10,000 people who had purchased units in the lurch.

The former home of Bugun TV, the scene of that control booth standoff in 2015, appears abandoned. In May, the only sign of life was a security guard, who said that nobody worked in the building. Asked who paid his salary, the guard said “the government.”

This was news to Mr. Ipek. Even with a number of lawyers on the case, he knows almost nothing about what has become of his businesses. None of the three publicly traded companies in Koza Ipek has issued an earnings report in roughly a year. During our interview, an aide told him that shares of one of the companies had risen that day by 15 percent. What had caused the jump?

Mr. Ipek shrugged as he headed outside for a cigarette break.

“I have no idea,” he said.

*Editor’s note: Hizmet Movement Blog reaffirms its non-endorsement policy of the various viewpoints expressed throughout the articles that are solely shared for the convenience of the readers.

Published on The New York Times, 22 July 2017, Saturday