As Ali Koç, a businessman from Turkey's wealthiest family which runs the conglomerate Koç Holding, was elected on June 3 as the new chairman of Turkish football and multi-sports giant Fenerbahçe, it is time to remember how the Koç Holding doubled its net profit under the AKP government.
After Ali Koç overwhelmingly defeated his rival Aziz Yıldırım at the club’s general congress on Sunday, thousands of fans took to the streets to celebrate the newly-elected chairman.
Some social media users have compared Fenerbahçe congress to Turkey's presidential polls on June 24 and shared pro-Koç posts in an attempt to show his win with a prelude to the elections, implying that as veteran club chair Yıldırım lost the elections, it is time for Recep Tayyip Erdoğan to lose the polls.
Meanwhile, some people criticised the tributes to Koç, saying that he is a member of a wealthy family circle who has increased its profits under the rule of AKP party.
The Koç Holding is one of the most profit-making capitalist circles during the rule of Erdoğan’s AKP party, escalating its turnover of 8,5 billion US dollar in 2012 to 27 billion in 2017.
As the holding's consolidated income has reached up to 2,5 billion US dollar on average in 2017, the group’s total profit has hit around 40 billion throughout the AKP rule for 16 years.
Koç Holding's total turnover corresponds to 15 per cent of 500 biggest industrial companies and 3 per cent of Turkey’s gross domestic product. The family owns such leading companies as oil corporation Tüpraş, automobile producers Ford and Tofaş, household manufacturer Arçelik and Yapı Kredi Bank.
PRIVATIZATION OF CRITICAL STATE-RUN OIL OPERATOR TÜPRAŞ
Turkey’s biggest oil-refinery operator Tüpraş was privatised in 2006 as the Koç-Shell consortium took over 51 per cent of Tüpraş shares in exchange for 4,4 billion dollars. As Koç Holding later bought the shares of Shell, Tüpraş’s turnover had been 10,9 billion dollars while its pre-tax net profit had been 650 million in 2005.
Tüpraş’s total turnover exceeded 215 billion dollars as its pre-tax total net profit exceeded 9 billion in 12 years between 2006 and 2017. In other words, the big capitalist group regained the cost of privatisation only in 6 years.
Koç Holding has further escalated its net profits considering that the region’s huge oil supplier Tüpraş also owns Opet, one of Turkey’s biggest petroleum companies. The group also took advantage of tax cuts and many other incentives as it increased its investments in the capacity of diesel fuel and gasoline. The group enjoyed cost advantages thanks to the Northern Iraqi oil and the Islamic State oil with the support of the AKP government between 2014 and 2016.
ONE STEP FORWARD IN MONOPOLISATION WITH YAPI KREDİ BANK
The purchase of Yapı Kredi Bank (YKB) became yet another opportunity for Koç Holding during the rule of AKP party. Koçbank and its Italian partner UniCredit bought the shares of Yapı Kredi Bank for 1,5 billion US dollar as YKB became the fourth biggest bank in Turkey. YKB was taken over by Koç Holding following the financial crisis in 2001.
YKB reached a pretax net profit of 14,8 billion US dollar in 11 years between 2006 and 2017. As the holding increased its profits through banking operations, it could form a giant network with credits and consumer financing opportunities in operating its other companies like Ford, Tofaş and Arçelik. Koç Holding further increased its control owing to Yapı Kredi Bank.
The group’s consolidated profit around 1 billion US dollar in 2005 reached up to 2,5 billion on average between 2006 and 2016. Experts argue that around a half of the rise of 1,5 billion stems from Tüpraş. Considering Ford and Tofaş in automotive, Yapı Kredi in finance and Tüpraş in oil, this big triangle provided extra profits for the Koç family.
Koç Holding did only profit from Tüpraş or YKB in these years, but also from automotive and household goods, making it the most profit-making entity in this field, too. As the AKP boasted about constructing new highways and bridges around the country, thus Koç Holding could sell many more automobiles.
It also became the most profit-making group in the sector of durable consumer goods due to countrywide urban transformation as almost one third of house stocks were renewed.
Moreover, Koç Group has played a direct role in Turkey’s integration with international capital considering that part of the market was open to international companies like Shell and BP as Tüpraş was privatised. It is also in favour of international capital considering the petrochemical industry as one of the biggest importation deficits of Turkey.
WHAT DID PEOPLE LOSE AS KOÇ GROUP GAINED?
Following the privatisation of Tüpraş, the country’s importation dependency on petroleum has further escalated. Koç Group invested highly in diesel and gasoline, but did not increase the total capacity. Meanwhile, petroleum consumption and imported amounts have further increased.
A net profit of 1 billion US dollar and cash management around 10 billion dollars was left to Koç Holding as these amounts could be used for the public interest. Price adjustments in petroleum have been carried out in favour of the private sector in defiance of the people. As importation escalated instead of refinery capacities, this became a major factor in triggering current deficit.
Two aspects are striking in the integration with international capital in automotive and household goods under the lead of Koç Group: increasing Turkey’s dependency on importation. The dependency has highly escalated that Turkey has almost come to a halt in many products, particularly in such basic industries as refinery, chemistry, iron-steel.
The second aspect is that the working conditions of the qualified workforce have further deteriorated and exploitation has increased. Koç Holding is a model group in developing a “network” in Turkey since it systematically exploits workforce of a highly qualified section like technicians and engineers and well-trained sections in the service sector.