$4.5 billion tax conspiracy by Gülenists against Doğan Group
First Wave: 1.17 million Turkish Liras
The chain of events that led to a huge tax fine being levied on the group began in February 2009 in regard to shares in Doğan TV that were bought by the German Axel Springer Group in 2007.
Two years after Doğan TV sold 25 percent of its shares to the German group for an amount of 375 million euros, tax agents from the Finance Ministry alleged that the tax on the transaction was paid three months late – in early 2007 instead of late 2006 – resulting in them inflicting a tax fine worth 972 million Turkish Liras, which, with interest, totaled 1.17 billion liras.
Doğan Media Holding appealed the fine, winning a case in January 2010 in which the court said the fine was unfair. However, the Revenue Administration took the case to the Council of State, which ultimately upheld the local court’s ruling vindicating the group a year later.
While one of the tax agents who inflicted the fine on Doğan Media Holding resigned, two others were dismissed from their duties due to links to the Gülenist movement with a decree law that was passed following the July 15 coup attempt.
Second Wave: 5.6 billion Turkish Liras
Authorities attempted to impose a second wave of tax fines on the group in September 2009 when a commission consisting of five tax agents presented a report alleging that during the same sale of shares in 2007 to Springer, “no value-added tax (VAT) was paid for the sales of stocks and certificates of receipt.”
However, stock and receipt certificate sales are not subject to VAT, according to all legislation and accompanying regulations.
The fine against Doğan TV, Doğan Production and D Production amounted to 5.63 billion liras and included tax, a penalty and resultant interest.
Based on the 2009 exchange rate of 1.55 liras to the dollar, this amount equates to $3.630 billion.
The fine was unprecedented in Turkey.
The taxation department also demanded security deposits worth over 5 billion liras from the Doğan Group and initiated a precautionary assessment.
All inspectors fired
All five tax agents who were involved in the second wave were dismissed from their posts upon a decree law introduced after the July 15 over links to the Gülenists.
Their supervisor was also dismissed as part of the same decree law due to alleged Gülenist links. While two of these supervisors are in custody, another is still on the run.
1.1 billion Turkish Liras in unfair payments
The two waves of tax investigations resulted in unfair tax fines totaling 6.80 billion liras being assessed against the Doğan Group, which is nine times more than the lira amount of the 2007 transaction of the group with the German company.
After the second wave, Doğan Group again appealed the fines. All of the cases opened ended in favor of the group, but the Revenue Administration appealed the rulings, taking them to the Council of State. The period coincided with the September 2010 constitutional referendum in Turkey, which also witnessed the alleged infiltration of Gülenisits into the country’s main judicial body, the High Council of Judges and Prosecutors (HSYK).
The elections also led to a change in the members of the Council of State as 61 new members were appointed. As the legal battle by the Doğan Group was delayed and due to the amount demanded, the group decided to go for reconciliation as part of a tax amnesty law and agreed to pay 1.10 billion liras in June 2011 to close the case.
The amount, considering the currency of that time, was approximately 700 million dollars, which equals 2.4 billion liras at current exchange rates.
Huge drops in stock values
The course of the developments show that, in contrary to the allegations that the Doğan Group was cooperating with Gülenists, members of the network attempted to eliminate the group with its billions of liras in fines, according to the media group.
These fines inflicted a heavy financial blow on the Doğan Group. While Doğan Media Holding’s market value was $2.51 billion on Feb. 18, 2009, the value dropped to $186 million on the first day of the fine.
Doğan Holding’s early 2008 value of $2.80 billion also dropped to $796 million on the same day.
Agents sent to US for reward
Another striking fact about the operation against the group by Gülenists was that the tax agents that inflicted these fines were all sent to the United States as a reward for a year after their operations.
Faced with such injustice and conspiracy in 2009-2010, Doğan Group probed the acts with which authorities attempted to eradicate them, determining that all the inspectors were sent to the United States after their reports, concluding that this could have been a Gülenist operation against the group.
The conspiracy against the Doğan Goup was hatched at the end of the 2000s but could only become clear the decree laws that were imposed in the aftermath of July 15.