Just a few months ago, Mehmet Emin Karamehmet was being feted in business circles as Turkey's comeback man. Forbes magazine had again ranked the billionaire chairman of Cukurova Group, one of several sprawling family-owned conglomerates that dominate Turkish business, as the country's richest man. Mr Cukurova's oil and gas subsidiary, Genel Enerji, was about to seal a reverse takeover that would launch it on the main board of the London Stock Exchange. To top it all, the chief executive of a rival group was succumbing to a government-led campaign against his business interests.
Even this January, Karamehmet was vigorously pursuing his media interests by bidding on behalf of his TV platform Digiturk against Turkish state-owned television for the live broadcasting rights to the Turkish football league. His US$1.97 billion (Dh7.23bn) offer bagged the deal. But the wheels were already falling off Cukurova's wagon. In November, Genel's proposed $6bn tie-up with Canada's Heritage Oil fell apart amid disclosures of insider trading by its top executives. Last month, the UK Financial Services Authority fined Mehmet Sepil, the chief executive of Genel, a record £967,005 (Dh5.3 million) for dealing in the London-listed shares of Heritage on the basis of information about the results of drilling in Iraqi Kurdistan, before Heritage had announced its discovery of a world-class oilfield.
Before that, Karamehmet had joined his chief media-industry rival Aydin Dogan, the owner of Turkey's Dogan Media Group, as a target of the Turkish prime minister's well-documented vendetta against the country's fourth estate. Last month, a Turkish court handed Karamehmet a prison sentence of 11 years and 8 months and a fine of 471.9m Turkish lira (Dh1.13bn) after convicting him of credit fraud in an eight-year-old, politically charged case that the state had unexpectedly revived.
Karamehmet is expected to appeal against his conviction. Last week, however, the embattled tycoon stepped down as president of Turkcell, the largest Turkish mobile phone operator, of which Cukurova's 18 per cent controlling interest is the group's most profitable holding. Karamehmet, whose personal fortune has shrunk in the past decade to $2.9bn from $5bn, slipped last month to second place in the Forbes ranking of rich Turks, behind Husnu Ozyegin, the owner of the financial group FIBA Holding.
This may be rock-bottom for Karamehmet, who survived a major business crisis early last decade when he lost control of two banks. Yapi Kredi and the now defunct Pamukbank had accumulated billions of dollars in bad debts, including significant loans to other Cukurova companies. Karamehmet was forced to sell a large chunk of Turkcell to repay nearly $5bn after Ankara intervened. The debt repayments were not emulated by business rivals in similar positions, but unlike those executives, only Karamehmet was prosecuted. Last week, a Turkish judge ruled that Karamehmet authorised his banks to lend money he did not believe would be repaid. Commentators have pointed to the selectiveness with which Ankara prosecuted the case and to the systematic harassment of Turkish journalists and businessmen associated with media outlets critical of the government as reasons to question the ruling's fairness.
Can Karamehmet bounce back a second time? That may depend on the Byzantine relationships between Turkey's government, its judiciary, its intertwined media, financial and other business interests, and even the so-called "deep state" implicated in the alleged Ergenekon plot to overthrow the government. Last month, Karamehmet was called to testify before the prosecutor heading the investigation into the clandestine group. This came after Taraf, a Turkish daily newspaper, published what it said were transcripts of a conversation he had with retired army officers suspected of planning a coup.
Even if the supreme court exonerates the 65-year-old executive, his business empire could continue to unravel if its structure and management fail to adapt to business trends favouring companies offering superior technical competence in specialised fields. Cukurova's fate in turn could have international repercussions, as the group's holdings stretch well beyond Turkey's borders into Eurasia and parts of the Middle East. Genel, for instance, pumps oil in Iraqi Kurdistan.
The Genel insider-trading case was cut-and-dried. Mr Sepil and two other company executives admitted wrongdoing and apologised for violating UK securities law - through ignorance, they said. There was no suggestion their boss knew what they were up to. In parts of Turkey, Karamehmet is considered a down-to-earth folk hero. His suits are not flashy and he drives his own car, a Renault Megane, in preference to riding in limousines. Turks love their mobile phones as well as TV sport and soap operas, so the Cukurova boss holds a certain appeal for the man on the street.
Karamehmet has also been described as a reclusive workaholic who nonetheless refrains from closely controlling his operations. His deputies are encouraged to develop their own business strategies as their captain scans the horizon for more opportunities. "There is no core business. The opportunity is anything where with little investment he makes a lot of money," a colleague of Karamehmet told the Financial Times last year. Murat Vargi, the entrepreneur who founded Turkcell, has said Karamehmet's appetite for risk is matched only by his relentless pursuit of financial gain.
Critics, however, say that while Cukurova's boss has a keen eye for profitable new ventures, he also holds on to poorly performing businesses for too long. Other analysts suggest that in some areas, Cukurova may have bitten off more than it can chew. Those businesses include oil. Genel has little history as an oilfield operator and may have won its Kurdish concessions through political connections rather than technical competence. By getting caught for insider trading, Genel's management have handed the Kurdistan regional government's political opponents in Baghdad some potent ammunition for undermining Kurdish oil deals.
The conviction of Karamehmet compounds that situation by giving Ankara an excuse to turn down requests from Genel and other Kurdish oil producers for support in negotiations with Baghdad. Genel, its Chinese partner Sinopec and Norway's DNO are so far the only foreign firms pumping Kurdish crude. Exports through Iraq's northern oil pipeline into Turkey began last June but were halted three months later over lack of payment to the producer trio. The heightened potential for that impasse to continue is just one messy outcome of Karamehmet's fall from grace.
@Email:tcarlisle@thenational.ae