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P 121326Z FEB 10
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RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
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INFO RUEUITH/ODC ANKARA TU PRIORITY
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UNCLAS ISTANBUL 000055 
 
SENSITIVE 
SIPDIS 
 
DEPT PLEASE PASS USTR 
 
E.O. 12958: N/A 
TAGS: ECON EINV ETRD EFIN PGOV PREL PHUM TU
SUBJECT: SENTENCING OF TURKEY,S 2ND RICHEST MAN AND MEDIA 
MOGUL NOT SEEN AS POLITICAL 
 
REF: 09 ANKARA 1705 
 
¶1.  (U) On February 10 Mehmet Emin Karamehmet, President of 
Cukurova Holding, was sentenced to 11 years and eight months 
of jail for embezzlement by Istanbul's Heavy Penal Court. 
Known as Turkey's second richest man, Karamehmet was 
convicted of embezzling funds from Pamukbank, a bank he owned 
before it was seized by the Savings, Deposits, and Insurance 
Fund (TMSF) in 2002 due to a US $2 billion capital shortfall. 
 The Istanbul court also fined him 472 million Turkish Lira 
(nearly US $312 million) for misusing loans provided by the 
bank. The court case against Karamehmet was opened six years 
ago in response to complaints from the Turkish Banking 
Regulatory and Auditing Board (BDDK) and the TMSF. 
Karamehmet is expected to appeal to the Higher Court of 
Appeals. 
 
¶2.  (U) The Cukurova Group's business activities range from 
media and telecommunications to energy, transportation, and 
finance.  The Group's Genel Enerji company is very active in 
northern Iraq.  The group owns a number of media companies 
including Aksam and Tercuman newspapers, Show TV, and 
Digiturk cable. Although Aksam is more mainstream, Tercuman 
is considered ultra-nationalist and anti-government. 
Tercuman's former editor-in-chief, Ufuk Buyukcelebi, was 
briefly detained during a round of Ergenekon raids in 2008. 
Presently, the media is not portraying the sentencing of 
Karamehmet as politically motivated, in contrast to much of 
its reaction to the government's tax case against rival Dogan 
holding (reftel). The media instead has focused on the 
financial difficulties of tycoon Karamehmet, who has long 
eschewed the public limelight.  (Note: Journalist contacts at 
Aksam have told us that they had not been paid for three 
months, while Digiturk seemed to be able to afford a US $1.5B 
five-year bid for premier 
football league broadcast rights). 
 
¶3.  (SBU) Comment:  The Cukurova Group's evident economic 
problems and its comparatively less controversial media 
influence lead us to caution against assuming that Karamehmet 
is another Dogan.  This case instead arises from the 2001 
Turkish financial crisis, which was triggered in part by 
Turkey's then-poorly regulated banks making huge, 
non-collateralized loans to owners like Karamehmet that were 
never repaid.  Interbank, another Cukurova Group bank, failed 
in 1999.  Pamukbank went under early in 2002 after its assets 
were distributed (via unpaid loans) to various Cukurova Group 
companies. The GOT spent US $43 billion to restructure its 
financial system after the crisis.  Part of that process - 
done with IMF and World Bank help - involved taking over 23 
bankrupt banks, including Pamukbank.  The Karamehmet 
prosecution grew out of that clean up process.  However, as 
one of post's investment analyst contacts notes, such cases 
will not make attracting foreign investment any easier.  End 
Comment. 
 
 
 
WIENER