OYAK to maintain privileged position after intense lobbying

First established in January 1961, almost a year after the country’s first military coup, to generate additional income for underpaid officers, OYAK became a huge business empire with stakes in a number of companies in the automotive, banking, cement, finance, food, chemical and service sectors, amongst others. With nearly 60 affiliates, OYAK is one of the largest holdings in the country with total assets of TL 9.64 billion; OYAK Renault, MAİS Otomotiv, Ereğli Demir, İsdemir, OYAK Beton, Bolu Çimento, Ünye Çimento and Adana Çimento are some of OYAK’s flagship companies. Law No. 205 gives financial and administrative autonomy to OYAK, which makes the institution’s activities less transparent. The institution enjoys the advantages offered by public authority in violation of the rules of competition.

The existence of OYAK as an untouchable military conglomerate has long been a problem, but none of Turkey’s governments have attempted to bring OYAK in line with the rules of fair competition since its creation in 1961. A recent attempt from the KİK has now proved ineffective following OYAK managers’ lobbying activities both in and out of Parliament. KİK earlier said that an OYAK affiliate, cement producer Bolu Çimento AŞ, has to comply with the rules applied to other public institutions. OYAK appealed to the Ankara 7th District Administrative Court demanding that the KİK decision be annulled, but the court declined OYAK’s demand.

Following the court’s decision OYAK received a paper showing that the institution is not subject to the Ministry of Defense but is an autonomous company. The company managers later conveyed their demand to Turkish Armed Forces (TSK) Chief of General Staff Gen. İlker Başbuğ. He later discussed the issue with Defense Minister Vecdi Gönül, who signed a paper ordering that “OYAK and its affiliates would continue enjoying a privileged position regardless of any intervention from KİK.” In addition to this, OYAK prepared a draft to ensure their privileged position will continue and sent this to Parliament, which is currently working on a change to the existing income tax laws. OYAK managers have allegedly tried to coax deputy chairmen of political parties in Parliament to support their offer and include a clause concerning OYAK in the new tax law. It now appears the OYAK managers have been successful in their lobbying activities; anonymous sources from the ruling Justice and Development Party (AK Party) on Tuesday told Today’s Zaman that a change to the law would guarantee the continuation of OYAK’s privileges.

Corporate harshly criticized in public

The current privileged position of OYAK is a source of severe criticism in the public. Star daily columnist Mehmet Altan tells Today’s Zaman that OYAK, which has emerged as an economic power thanks to the military, is a serious barrier to democratization in Turkey. “The military has now turned into a separate holding, a situation that is not seen in democratic countries. There is no other example of such an organization on earth, except for a similar company in Paraguay.” According to Independent Industrialists and Businessmen’s Association (MÜSİAD) President Ömer Cihad Vardan, no institution should have the privilege to violate the rules of the free market economy in a democratic country. Vardan thinks the KİK was right in their decision to deprive OYAK of its privilege.

In a separate comment, the Turkish Economic and Social Studies Foundation (TESEV) said on Tuesday that the current privileges offered to OYAK “contradict the requirements of a democratic structure” in Turkey. A TESEV report titled “Military-Financial Structure in Turkey: Situation, problems and solutions” said the political authority should give end OYAK’s privileges, adding that the company’s operations and expenditures have to be monitored by a civil body.

Stoppages from members constitute a serious portion of OYAK’s revenues. The institution has long been criticized over cuts from reserve officers’ wages; OYAK has so far failed to explain where this money was being used. Another problem that brought OYAK to public attention was when, in 2007, lower-ranking retired military personnel decided to take a 40-year-long legal battle to the European Court of Human Rights (ECtHR) in Strasbourg over allegations that the conglomerate deprived them of representation at the management level even though they make up almost 70 percent of the strength of the TSK. According to OYAK law, generals on its boards are appointed by the General Staff. It is not only the noncommissioned officers who are affected by OYAK practices, but also all those under the rank of general.

In addition to OYAK, the military-run Foundation to Strengthen the Turkish Armed Forces (TSKGV) owns or has shares in different military procurement companies that enjoy autonomous status independent of the political authority.