Mustafa Koc, chairman of Turkey’s biggest conglomerate, Koc Holding, and one of the country's most prominent businessmen, has died of a heart attack aged 55. Koc, who according to Forbes magazine was worth more than $1bn, had been the conglomerate’s chairman since 2003, taking over the company from his father Rahmi Koc.
What became Koc Holding was founded as a grocery store in Ankara in 1926 by Mustafa Koc's grandfather, Vehbi Koc, three years after the declaration of the Republic of Turkey. It now owns companies in more than 30 countries in five continents, including interests in the energy, automotive, appliances and finance sectors.
Koc companies include carmakers Tofas and Ford Otosan, and one of Europe’s largest appliance makers Arcelik, and Turkey’s fourth largest lender Yapi Kredi. During Mustafa Koc’s term as the company’s chairman, Koc also purchased 51% of the country’s sole refiner Tupras in a $4.1bn privatisation deal in 2005.
Born in 1960, Mustafa Koc was educated at the Lyceum Alpinum Zuoz in Switzerland and graduated from George Washington University in 1984. He was hospitalised after falling ill while exercising at home in the morning, and died on January 21.
The Koc family is among the most respected and prominent members of the secular business elite in Turkey but has usually tried to stay out of politics. But this became impossible under prime minister and now President Recep Tayyip Erdogan who endlessly targets the country’s secular and Istanbul-based business elites, representing the “old, repressive establishment” that he wants to undermine.
Erdogan directly targeted Koc Holding three years ago when anti-government protests rocked the nation, posing the biggest challenge to Erdogan’s ruling Justice and Development Party (AKP) since coming to power in 2002.
At the height of the street protests, a group of protesters attempting to escape tear gas fired by the police took refuge in the Koc-owned Divan Hotel, in the heart of Istanbul near Gezi Park. Hotel management admitted the protesters, but the police fired more tear gas into the hotel lobby. Ali Koç, Mustafa Koc’s younger brother, allegedly ordered hotel management to help the protesters. This bold move outraged Erdogan.
A few days later, in a public speech Erdogan said: “We know which hotel owners helped terrorists. Helping terrorists is a crime. And those crimes will not remain unpunished.”
In July, finance ministry auditors raided the offices of Koc companies Tupras and Aygaz. More than 200 inspectors were reportedly looking for evidence of smuggled oil, and for tax violations. At that time, the finance minister Mehmet Simsek denied any link between tax inspections and Erdogan’s remarks about Koc Holding.
Two months later, the government the government cancelled a tender to build warships for the Turkish navy that had been won by Koc’s RMK Marine. In 2014 Erdogan’s government cancelled another tender won by a consortium made up of Koc Holding, Gozde and Malaysia's UEM to operate the bridges and roads for 25 years. The $5.72bn price offered by the consortium was too low, the target price should have been at least $7bn, said Erdogan at that time.
Koc did not retailiate but in one of his rare interviews he told Hurriyet newspaper in 2014 that “we don’t fight with our state, but we won’t allow anyone to destroy our reputation that we have built over 90 years.”
Referring to still not properly investigated corruption scandal involving Erdogan’s clique he said: “If these allegations are true, those who responsible should bear the consequences." He added: “This country and our people deserve clean politics.”
Given the importance of the Koc Holding’s importance for the Turkish economy, tension between the country’s largest company with deep international connections and the government could not go on forever.
Erdogan attended the opening ceremonies of a Tupras plant and a Ford-Koc auto plant in 2014, in a sign of reconciliation. Since then relations between Erdogan and Koc Holding have been calm with no publicised problems. This week Erdogan even called Rahmi Koc and Ali Koc to offer his condolences to the family.
Koc Holding is the only Turkish business group on the Fortune 500 Global List. Koc Holding and some 100 subsidiaries with sales of $31.3bn in 2014 accounted for about 5% of Turkey’s GDP and 9% of
The group has today become a truly global brand partly by establishing partnerships with global auto giants Ford and Fiat, and with Italian bank UniCredit in lender Yapi Kredi Bankasi.
Ford Motor Company’s Bill Ford remembers Mustafa Koc as “a very close friend, an outstanding business leader, a man of true integrity and a loyal friend and partner to Ford over many decades.”
“His family and mine have a special relationship that goes back to Henry Ford and Vehbi Koc”, said Bill Ford in a statement.
Now the question is who may succeed him and whether the group’s strategy will change. Koc Holding shares fell as much as 3% on the news of Mustafa Koc’s death.
Some analysts expect Ali Koc, the younger brother and board member, to take over the company. Ali Koc, born in 1967, received his BA from Rice University in the US and did his MBA in Harvard.
“We do not think there will be a problem with succession in Koc Holding or that the group's successful business strategy thus far will change for the negative after Mustafa Koc”, local brokerage house DenizInvest commented.
“The company has a very strong institutional strength so will manage through this,” Tim Ash at Nomura in London told the news agency Anadolu.