Turkish authorities last week seized control of two power utilities acquired by the controversial Uzan family, citing violations of their legal obligations following the companies’ privatisation in 1993.
The energy ministry said it was cancelling the Uzans’ operating licences for Cukurova Elektrik and Kepwz Elektrik and had seized both companies production, transmission, and distribution facilities. Trading in Cukurova and Kepez shares, which were already on the watch-list of the Istanbul stock Exchange, were suspended. Turkish television showed company managers being escorted off the premises by police.
In coming days, the government is also due to decide whether to sell Petkim, a state-owned petrochemicals producer, to the Uzans after their Standart Kimya made the highest bid for the company at a privatisation auction last week.
Since they were acquired by the Uzans at privatisation in 1993, Cukurova and Kepez have been involved in a series of disputes with the authorities, most of which have become bogged down in the country’s antiquated legal system.
But in spite of previous attempts to discipline the companies for various irregularities, weak coalition governments have until now appeared powerless. But the ruling Justice and Development Party (AKP) appears to be determined to act.
The disputes first started in 1995 with complaints by Mark Mobius, an emerging markets investor, that his rights as a minority shareholder were being violated by the Uzans.
Of the 58 applications for criminal action against the companies launched by the Capital Markets Board, the stock market regulator, only one has resulted in a conviction.
Without mentioning previous disputes, the energy ministry said in a statement that the two companies had failed to turn over their transmission rights to a state-owned transmission company by the end of February, as dictated by electricity market reforms agreed with the International Monetary Fund and the World Bank.
Zafer Savrum, a manager of Cukurova, accused the government of acting “politically to damage” the Young party, set up by Cem Uxan, the younger son of Kemal the patriarch.
Recep Tayyip Erdogan, the prime minister, said earlier this month that the right wing, xenophobic, Young party was the only party whose ratings were rising.
At about the same time, his energy minister complained that the new government’s hands were tied to unfavourable agreements giving the two power generation companies exclusive rights to sell electricity to consumers in five Mediterranean cities.
(By Leyala Boulton fron Financial Times 13/06/03)