UPDATE 1-Dogan fine a matter for Turkey, not EU-minister

Wed Oct 14, 2009 9:44am EDT

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ANKARA Oct 14 (Reuters) - Turkey's chief EU negotiator said on Wednesday foreign authorities had no cause to intervene over a record $3.3 billion tax fine imposed on Turkey's largest media firm Dogan Yayin DYHOL.IS.

The EU executive had earlier voiced concern over treatment of Dogan Yayin in a tax dispute that has raised doubts about freedom of speech in the EU candidate country. Dogan newspapers such as the best-selling Hurriyet have been strong critics of an AK party government that commands a huge parliamentary majority.

"The tax fine imposed on the Dogan group is a matter for the Turkish Finance Ministry, not foreign authorities, and if it can't solve it, it is a matter for the Turkish judicial system," Turkey's Chief European Union negotiator Egemen Bagis told a news conference.

In its annual report on enlargement Brussels said Turkey needed to step up political and economic reforms, improve the rights of minorities, women and trade unions as well as normalise relations with the Republic of Cyprus.

It also suggested the AK Party government might be treating Dogan Yayin, which controls half of the Turkish private media market, unfairly.

"We have serious concerns about tax fines for Dogan. I have asked the Turkish authorities to treat this matter very seriously," EU Enlargement Commissioner Olli Rehn said.

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The state has in the recent past seized entire companies or assets of prominent businessmen. In 2007, the ATV-Sabah media group was seized for irregularities and sold for $1.1 billion.

Turkey's tax authority has rejected collateral provided by Dogan Yayin to fight the tax fine, placing a preliminary injunction on the sale of shares in three of its units.

Dogan Yayin has accused the government of singling it out because of critical coverage of Prime Minister Tayyip Erdogan's government. AK denies the accusation.

Aydin Dogan has been accused of using his media outlet to further his business interest and campaign against Erdogan, who secularists in Turkey suspect harbours an Islamist agenda.

In recent years, the business landscape has seen a marked change in Turkey with the emergence of a powerful conservative, pro-AK Party elite that has challenged the dominance long enjoyed by a secular business elite represented by families such as Koc, Sabanci and Dogan. (Reporting by Zerin Elci, writing by Daren Butler; editing by Ralph Boulton)

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