Quotes of the Day

Lightly tanned and galvanized by his daily workout, Cem Uzan, 42, is relaxing in a trim blue business suit at his swanky party headquarters in downtown Ankara. Behind him is a wall-length map of Turkey, lit up with red flags of towns and villages he has visited in his first year as a barnstorming politician. He is in an expansive mood. "I believe in certain values in life," he says. "I want to set an example of public service." Politics, in fact, is a welcome pursuit for Uzan, who is leader of the Youth Party. But he is also scion of one of Turkey's richest and most controversial business empires. And business for the Uzan group is not going so well.

In June the government of Recep Tayyip Erdogan seized two major Uzan-owned utilities in southern Turkey for breaching energy regulations, and in July the country's independent banking regulator took over the Uzans' flagship bank, Imar Bank, noting it was "not meeting its responsibilities and posed a danger to the banking system." The five Uzan TV stations were briefly ordered off the air in July for violating broadcasting laws forbidding media owners from using their networks to promote their own political or business interests, and Cem himself is barred from leaving the country because of the bank imbroglio.

And that's just the family's troubles in Turkey. In New York, a judge could rule as early as this week on a fraud and racketeering case brought against the Uzans by Motorola and Nokia. The mobile-phone giants allege that the Uzans lured them into loaning $2.7 billion in cash and equipment to an Uzan-controlled company, Telsim, and that the family had no intention of repaying the loans. Hundreds of millions of dollars of the Uzans' overseas assets have been frozen pending the ruling, which if it goes against them and is upheld on appeal could cost the family $9 billion. "The era of the Uzans' untouchability is over," says Ismet Berkan, chief political columnist of Radikal, a leading left-wing newspaper owned by the Dogan group. "Their empire is unraveling."

The clash marks a watershed in Turkey. If the crackdown is successful, the government will claim a major victory in the fight against Turkey's old way of doing business. That could also help accession talks with the European Union, which has been calling for reforms. And with George W. Bush weighing in on Motorola's behalf last year, redress in the U.S. case would please Washington, with which Ankara is eager to patch up relations after the Iraq war. Failure, however, could see the Uzans emerge politically stronger than ever.

The Uzan business empire is built on humble foundations. The patriarch of the Uzan clan, Kemal, the son of a Bosnian farmer who emigrated to Turkey in the 1920s, built a construction empire in the 1970s and '80s, benefiting from close ties with then Prime Minister Turgut Özal, who in effect brought capitalism to the country. Cem Uzan's initial enterprise was to launch Turkey's first private TV channel, Star TV, together with Özal's son, Ahmet, in 1989. The privatization boom of the 1990s allowed the Uzans to expand into other media and utilities — and to build the country's second-largest mobile-phone carrier, Telsim. Family assets, according to Forbes magazine, now exceed $1.3 billion. And Cem Uzan heads the country's second-most popular political grouping, the Youth Party, which he founded in July last year as a vehicle for his own political ambitions.

But as the Uzans' reach has grown, so too have their troubles. During the telecom boom of the late 1990s, Motorola and Nokia lent $2 billion and $700 million, respectively, to Telsim. The Uzans never paid them back. In 2002, the two firms filed racketeering charges against the family in U.S. Federal Court, accusing them of perpetrating an elaborate scam.

Cem Uzan denies charges of fraud and racketeering in the Motorola case and called the Turkish government's actions a disgrace that he would contest in the European Court of Human Rights. "Erdogan's aim is to destroy our wealth. He believes that [the Youth Party] could not succeed without my funding," he says. "He wants to ban me from political life." Uzan even claims he feels his life is in danger because of political enemies. Adjusting his spotless white cuffs, he says: "What happened to freedom, the European Union? What happened to democracy, Mr. Erdogan?" For the Uzans, enemies have always come with the territory. The family faces scores of civil and criminal lawsuits at home, ranging from extortion to fraud. Siemens, Saatchi & Saatchi and Mark Mobius, the mutual-fund manager, have all alleged they were scammed by the Uzans. The Motorola and Nokia cases, however, are exceptional. It is the first major suit brought against the family outside Turkey.

And the figures involved are staggering. Under U.S. racketeering law Motorola is seeking to triple the $2 billion it says it lost. "I think the proof is very strong that the Uzans are business imperialists of the worst kind, in that they will go to any lengths, including fraud and racketeering, to preserve their business empire," U.S. District Court Judge Jed Rakoff commented at the New York trial in February. Rakoff is expected to rule against the family, which has said it will appeal.

"Lies! A bunch of outright lies!" Uzan says of the Motorola complaint, which among other things charges the family with using libel and extortion to intimidate its enemies. Judge Rakoff, he claims, is anti-Turkish. "He is biased against Turkey, against the Turkish people." As for the High Court judge in the U.K. who slapped Uzan family members with a 15-month jail term for contempt of court and a worldwide freeze on assets, he "thinks he rules the world." The whole Motorola-Nokia lawsuit is merely a "business dispute between one company and another" and should be dealt with in arbitration, says Uzan. He claims his family would have paid back the money if Turkey had not suffered a major economic crisis.

That doesn't help Nokia and Motorola. As a result of the losses, Motorola is facing 19 class actions from investors who say the firm failed to disclose that it was financing the sales it made to Telsim. Motorola lawyer Howard Stahl insists that his clients were prudent. "When you looked at the Uzans you found they were tough and hard but not radically different than the other people in developing countries who do oil or telecom. You had to deal with them."

Uzan's real venom, however, is reserved for Prime Minister Erdogan, whose Justice and Development Party was founded on Islamic principles. The move to shut down the family's profitable utilities stung. "What kind of a Muslim are you, man?" Uzan told a crowd in Bursa after the government seized the utilities. "You infidel!" The speech was subsequently re-broadcast on Uzan-owned television stations, earning Cem another libel suit — this time from Erdogan, who is seeking $600,000 in damages. Last week a prosecutor charged Uzan with insulting the government, a crime under Turkish law punishable by up to six years in prison. In his interview with Time, Uzan pulled out a Turkish dictionary, flipped to a page bookmarked for the occasion, and read from the colloquial definition of the word infidel: "'without mercy, pitiless, without conscience.'" In that context, he says, "I would say it again."

The government insists it was merely upholding the law when it shut the Uzan businesses down. Energy Minister Hilmi Guler said the Uzan utilities failed to pay debts and repeatedly refused to turn over their transmission lines to the newly formed national grid. Erdogan denied that his government was engaged in a political witch-hunt. "We have no personal vendetta," he said last week. "We have a duty to the people who elected us to rid the country of dirty odors." Analysts agree that while the crackdown may serve a political purpose, it may also be part of a long overdue anticorruption drive required by the European Union as a condition for accession negotiations to begin. "If you are going to fight corruption, you have to deal with the Uzans," claims Radikal columnist Berkan.

Bizarrely, state-owned companies continue to go Uzan's way. In June the family won yet another privatization bid, this one for the petroleum company Petkim, though it's unclear how it will come up with the down-payment by August's deadline.

Yet no one denies that Uzan's far-right nationalist Youth Party is a political threat. Support has risen in internal polls from 7% to 17% in the past eight months. A minimum of 10% is needed to win seats in parliament. Analysts attribute the spike to economic hard times — Cem is seen by many as a Turkish version of Silvio Berlusconi, an entrepreneur whose appeal lies in his business success and can-do attitude.

But anti-Western sentiment is growing in Turkey in the aftermath of the Iraq war, partly as a result of the U.S. government's harsh criticism of the country for failing to admit U.S troops. Paradoxically, Uzan's troubles with Motorola are probably helping him politically. The Motorola case "is a point of pride among his supporters," argues Arus Yumul, a sociologist at Istanbul's Bilgi University. "The fact that it was America he conned earned him points." In last November's elections, the party's slogans — "Turkey belongs to the Turks!" and "We don't need you, IMF!" — appealed to young Turks, who make up a disproportionate share of the Turkish population. They were also wooed by campaign promises of free tuition, free textbooks and free land.

And like Berlusconi, Uzan doesn't have to worry about how the media treat him. Uzan's eight television and radio stations and two newspapers allow him to get his message out without fear of critical coverage. During last year's elections he declined interviews to news outlets he didn't own. Still, Uzan insists he does not interfere with editorial decisions. "If I have five meetings and you as my opponent have one, should you have some air time? It's an editorial decision."

But it's not hard to see how Uzan's media serve his broader agenda. Last week, as the battle with Erdogan heated up, Uzan's Star tabloid ran a photograph of the Prime Minister as an earnest young man, sitting at the knee of a bearded Afghan, whom the newspaper identified — wrongly — as a "Taliban terrorist," a picture that Erdogan quickly dismissed as "insignificant."

Back in his office, Uzan rolls up his sleeves to display a rash of small scabs he says he received from well-wishers reaching out to him at a mass rally a few days earlier. "I will give up politics when the Turkish people don't want me," he says. Or presumably, if the money runs out.

• ANDREW PURVIS | Ankara
• Mogul Cem Uzan faces U.S. lawsuits and the wrath of his own government