Turkish authority cancels Koç Holding’s national warship contract

ISTANBUL

F-511 TCG Heybeliada, the lead ship of the MİLGEM project, near the Prince Islands to the southeast of Istanbul, 2011. DHA photo

Turkey’s top defense procurement body has announced it canceled a contract which was won by Koç Holding earlier to build a number of corvettes as part of the national warship project, or MİLGEM in its Turkish acronym, for around $1.5 billion, in a written statement.

The Defense Industry Executive Committee, led by Turkish Prime Minister Recep Tayyip Erdoğan, decided by late Sept. 26 to re-launch the tender after an in-depth re-examination of files by inspectors after some complaints were raised by companies who were excluded from the tender.

The statement said that the contract to produce six corvette ships by Koç Holding had been cancelled and a contract to build two ships would be awarded to the Turkish naval shipyard. The construction of four remaining ships will be put out to tender later, the statement read.

The MİLGEM project covers the construction of eight corvettes and four frigates for the Turkish army.

Construction of the first MİLGEM corvettes, the Heybeliada, was completed in 2008, while the second ship, the Büyükada, was submitted the Turkish navy Sept 27 by the Turkish naval shipyard. Corvettes are the smallest warships in the inventory of the Turkish Navy, as the country has no ocean coasts.

Divan Hotel in Taksim, which belongs to the Koç Group, had opened its doors to the Gezi protesters who were exposed to tear gas. For that reason Koç Holding was criticized by some groups for supporting the Gezi protests.

After the Gezi protests, the group’s flagship company, TÜPRAŞ, faced a number of tax and quality controls. And a government committee cancelled the contract for the national warship project (MİLGEM), which had been awarded to Koç Holding’s RMK Marine.

‘No relation with Gezi’

Finally, some statements reported that the Kalamış Marina tender would be renewed, taking away Koç’s right of operation there.

“It is quite natural to make effective tax controls in various sectors, especially when some notices are the case. It is not right to relate the latest [tax and quality] controls on some business groups with the Gezi protests,” said Economy Minister Zafer Çağlayan Sept. 27 during a meeting with a number of economy press members.

“Furthermore, the Defense Industry Executive Committee just canceled some contracts, while deciding the re-launch of some tenders during its latest meeting. We do wrong if we believe all these decisions were related to the Gezi protests or other things,” he noted.