Çukurova owner faces 11-year jail term
Mehmet Emin Karamehmet, the billionaire owner of Turkey's Çukurova Group, is threatened with a jail sentence for embezzlement, adding new legal worries to his battles with rival shareholders for control of the mobile phone operator Turkcell.
An Istanbul criminal court sentenced Mr Karamehmet to 11 years and eight months in prison, and to a fine of 472m TL ($312m), Turkish media reported. It has also imposed a travel ban. The case related to loans made when he owned Pamukbank, the lender seized by regulators with a $2bn capital shortfall in 2002.
The sentence could be overturned or reduced by a higher court and will only take effect if confirmed on appeal, according to the Savings Deposit Insurance Fund, which brought the case jointly with Turkey's banking regulator.
But the possibility of Mr Karamehmet having to pay a large fine, or even spend time in jail, may encourage Russia's Alfa Group and Sweden's Teliasonera (Stockholm: TLSN.ST - news) in their long-running efforts to wrest control of Turkcell from its stubborn chairman.
The Çukurova Group did not respond to requests for comment. Turkcell said in an e-mailed statement that it had received no official notification of the court's decision and that it would disclose any developments affecting the company.
Erdem Hafizoglu, analyst at BGC Partners, said there was no immediate pressure for Mr Karamehmet to sell Turkcell shares, adding, "in the worst case, he would manage the company from jail or leave it to any other family member".
Two other analysts, speaking off the record, agreed the ruling would not affect Turkcell's operations but said it would raise speculation on the outcome of the ownership battle. Turkcell's shares gained 1 per cent on Istanbul's stock exchange.
Turkish regulators have been tenacious in chasing businessmen whose activities contributed to a banking sector collapse and severe recession in 2001. Many banks had made big losses on loans to companies within the same group.
But Mr Karamehmet is rare in having paid more than $4bn since to settle his debt to the state.
He has also rebuilt his fortunes, retaining control of Turkcell in spite of a series of disputed deals, and investing in oil exploration in Iraq's Kurdistan region. Forbes magazine ranked him Turkey's second richest man in 2009.
