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Turkmenistan: Turkish Businessman Challenges President

By Mohammad Tahir At least two Turkish businessmen are seeking damages from Turkmen President Saparmurat Niyazov's administration (ITAR-TASS) PRAGUE, September 19, 2006 (RFE/RL) -- A 62-year-old Turkish businessman is preparing for an international arbitration battle against the autocratic president of Turkmenistan. Faruk Bozbey claims President Saparmurat Niyazov and his Turkmenbashi Foundation cheated him, jailed him, and ran him out of the country on bogus tax charges.

Bozbey served more than a year and a half in a Turkmen jail before his release and expulsion, with embassy help, nearly a year ago. Bozbey is now trying to clear his name and recoup millions of dollars in alleged damages.

'I'm Not A Liar'

Since his release in October 2005, Bozbey says he has pursued any available channels to get out of Turkmenistan's legal doghouse. He claims he went from rubbing elbows with President Niyazov -- also known as "Turkmenbashi" -- to being publicly disgraced for no fault of his own.

"When I got back to [Turkey], I again wrote them a letter -- even to Turkmenbashi -- and asked to repair my credibility," Bozbey told RFE/RL's Turkmen Service. "I said that I'm not a liar and that I did nothing illegal; if there is some mistake, present it to me and let's discuss it before independent and neutral courts. They haven't responded to me for two or three months, and now I've been forced to take it to court. And I'm doing that -- lawyers are preparing the necessary [documents]."
I'm not a liar and that I did nothing illegal; if there is some mistake, present it to me and let's discuss it before independent and neutral courts.

Bozbey is preparing to file a suit alleging breach of contract -- and seeking damages -- with an international arbitration court in Geneva.

Early Promise

Bozbey was part of a wave of Turkish entrepreneurs who came to Turkmenistan in the late 1990s. They were lured by sweeteners like tax exemptions and encouraging words from President Niyazov.

Officials say hundreds of Turkish companies are currently operating in Turkmenistan, with some 6,000 Turkish nationals living and working there.

Relations with the host government have not always been trouble-free: President Niyazov himself has expressed disappointment with foreign investors, and has accused even major Turkish businesses of mistreating their local employees.

Playing Favorites

Despite some public disagreements, government construction contracts have frequently been awarded to Turkish businesses. In fact, their frequency has led political opponents to accuse President Niyazov of illegally profiting from overly cozy deals.

The U.S. Embassy in Ashgabat has noted in its "Turkmenistan: 2005 Investment Climate Statement" that the Turkmen government "selectively chooses its investment partners."

Political opponents have alleged for years that corruption and lawlessness are driving away foreign businesses.

Kicking Back

Bozbey insists he has always complied with his company's agreement with Turkmen authorities. He says about one-third of his company's income was already being paid to the Turkmen president's foundation in an apparent kickback. Then, Bozbey claims, authorities demanded nearly all of the rest, 64 percent, in taxes despite their promise of a 21-year tax exemption.

"According to the contract, I already pay 30 percent of the income to the Turkmenbashi's foundation," Bozbey claims. "In addition to that, they asked me to pay 64 percent [of the company's income] as a back tax. And they demanded this tax for the first time five years after I established my business in Turkmenistan -- and in that five years, I have received some 18 documents from the relevant authorities stating that [my company] Bozbey is exempt from all taxes."

As Bozbey tells the story, his company's initial contract came in 1998 -- when it was awarded tax-exempt status for 21 years to establish an agricultural business on 5,000 hectares of farmland that belonged to a presidential foundation, Turkmenbashi Foundation. He claims to have invested some $4 million into the project in the first five years, which he says helped turn it into a profitable business.

He says that he was encouraged to keep investing in Turkmenistan in face-to-face meetings with President Niyazov.

...And Getting Kicked

But then in late 2002, Bozbey says Turkmen authorities accused him of tax fraud and demanded $1.3 million if he wanted to avoid a jail sentence.

Mehmet Seyfettin is an expert on Central Asian affairs at the Eurasia Strategic Center in Ankara. He says the timing of Bozbey's problems could suggest that he was caught in a presidential rethink.

Seyfettin says President Niyazov appears to have cooled to Turkish investors following a purported assassination attempt in November 2002. Several Turkish nationals were said to have been implicated in that alleged plot -- something that Seyfettin says put a damper on bilateral relations.

"In the initial years, the relationship between Turkmenistan and Turkey was very warm and was based on the widely spoken words 'two states and one nation,'" Seyfettin says. "And it continued until that so-called assassination attempt against life of the president on November 25 [of 2002]. After that event, the policies of the Turkmen president -- understandably -- cooled dramatically toward Turkey. And that continues. My own analysis is that Turkmenbashi is acting out of emotion, although states and their leaders should act rationally, not emotionally."

Human rights groups have accused Niyazov of using the alleged assassination attempt as an excuse to crack down on potential opponents. Foreigners were not immune, as Turkmen visa procedures were tightened and foreign nationals strictly monitored.

Fellow Traveler

Another Turkish national, Hamit Nursaloglu, counts himself as another casualty of President Niyazov's wrath. He says he was forced to leave the country shortly after the purported assassination plot and has already filed his suit with the same Geneva court.

Nursaloglu claims to have left behind some 400,000 euros (more than $500,000) that he was owed when he was forced to leave by Turkmen authorities. He says the official pressure began -- and his visa extension rejected -- after he started to demand payment for completed projects (in which his company, Erturk, was involved).

But at least Nursaloglu avoided jail time. Bozbey was less fortunate.

Bozbey received a 14-year sentence for tax fraud and won release after more than a year in custody with the aid of the Turkish Embassy in Ashgabat.

He has vowed to seek some $17 million in damages.

But more than three years after their dreams of Turkmen profits came crashing down, it is still too early to say whether the Turkish businessmen's arbitration suits will salvage their investments.

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