Turkish regulator appoints former ministers to Turkcell board
Former Culture and Tourism Minister Atilla Koç. The company ‘s board dispute centers around a loan taken out in 2005 by Çukurova from Altimo. TeliaSonera holds 37 percent, while the remaining 34 percent is largely free floating. AA Photo
Turkey’s Capital Markets Board (SPK) has appointed three independent board members, including two former ministers, to mobile phone operator Turkcell, in what is being seen as a potential first step toward a first board meeting in two years, following a long-running shareholder dispute.
The regulator also removed three members from the board, it said in an e-mailed statement late on March 11. The government warned last year it could intervene to force publicly traded companies to assign board members in the interests of investors.
Turkcell is at the center of a legal battle for control between its partners, Turkey’s Çukurova Holding, Nordic telecommunications group TeliaSonera, and Russia’s Altimo. The dispute has left Turkcell unable to agree on the composition of its board and unable to distribute its dividends.
Two of the newly appointed members are former ministers who served under Prime Minister Recep Tayyip Erdoğan. In addition to Mehmet Hilmi Güler, former energy minister, and Atilla Koç, former culture and tourism minister, the third new member is Ahmet Akça, the Chairman of the Board of Trustees at Bezm-i Alem University.
The remaining members are independent member Colin Williams, Çukurova representative Gülsün Nazlı Karamehmet Williams, who are accused of standing by Çukurova, along with Senior Vice President of TeliaSonera Karin Elliason, and Altimo Vice President Alexey Khudkayov.
Five board members out of seven must vote in favor for a decision to be taken by the Turkcell board, a requirement that has caused the long-standing deadlock. The Nordic telecom firm had said it supported the idea of increasing the number of independent board members and accused Çukurova Group of hampering all their attempts.
“Any attempts to increase the number of independent directors have been effectively blocked by Çukurova, exercising its veto right through Çukurova Telekom Holding, a structure put in place to enable a minority shareholder to block majority decisions,” the company said in a written statement.
“We see the SPK initiative as a step towards fair corporate governance and efficient management that will enable Turkcell to grow its local and regional leadership,” says Per-Arne Blomquist, President and CEO of TeliaSonera.
Blomquist added that they hoped the company would start paying dividends again.
Çukurova also welcomed the decision in a statement. “We think the new appointments will help solve the continuing disputes and deadlock in Turkcell,” it said.
Meanwhile, Russian stakeholder Altimo said it sees “the appointment of three directors as a forced and temporary measure and expects that, with the final resolution of Altimo’s dispute with Çukurova.“
“It’s disappointing that Cukurova’s sustained obstruction over corporate governance of Turkcell has forced the SPK to appoint external Board members to enable the Company to comply with Turkish regulations,” Evgeny Dumalkin, Vice President of Altimo said in a statement.
Since the incoming members are figures apparently backed by the government, sector analysts have panned the move. “These assignments could be perceived as an example of government interference in the private sector, as the all of the independent members are appointed at the government’s wishes,” columnist Erdal Sağlam told daily Hürriyet, criticizing the attempt as a huge strike against the SPK’s independence. “Although the SPK’s intervention is normal, as the appointed members are politicians, the attempt has become controversial,” columnist Uğur Gürses said, stressing that the message sent to investors was not positive.
Turkcell posted $1.17 billion in 2012 profits, with a 77 percent jump from a year earlier. k HDN