September 8, 2017 / 9:23 AM / in a year

Turkey dismisses head of $40 billion wealth fund after slow start

ANKARA (Reuters) - Turkey has dismissed the head of its $40 billion sovereign wealth fund, officials said on Friday, alluding to impatience on the part of President Tayyip Erdogan over a failure to launch any major investment projects a year after its founding.

Mehmet Bostan was removed as chairman of the fund as of Thursday, a senior official told Reuters. The head of the Borsa Istanbul stock exchange, Himmet Karadag, has been named as acting chairman, the official added, declining to be identified because of the sensitivity of the issue.

The fund had so far not shown the “performance expected by the public”, the official said, without elaborating. Reuters was not immediately able to reach Bostan or Karadag for comment.

The dismissal was confirmed by Erdogan adviser Hatice Karahan, who told Bloomberg HT television the fund had experienced “delays” in the last year, but commended Bostan for his efforts.

“There have been delays. We have information that there has been no progress,” she said.

The fund was set up last year by the government to develop and increase the value of Turkey’s strategic assets and provide resources for investment. Historically, sovereign wealth funds have been set up with oil producers such as Norway or Gulf states, using money from energy exports for investment.

But Turkey imports almost all of its energy and some economists have said the government could better spend money paying down a national debt that runs at roughly 30 percent of economic output.

The government has transferred stakes worth billions of dollars of state assets, including stakes in flag carrier Turkish Airlines, major banks and fixed-line operator Turk Telekom.


The government has said it wanted the fund to manage $200 billion in assets as soon as possible. One senior official told Reuters this year that the fund could be used to secure financing for major infrastructure projects.

Ratings agency Standard & Poor’s has said the fund was more akin to a national development bank, with its design suggesting an effort to create a funding vehicle by leveraging up assets.

Under Erdogan, who supports using large-scale projects to bolster the construction industry and domestic demand, Turkey has built high-speed railways, suspension bridges and undersea tunnels.

Other planned mega-projects include one of the world’s biggest airports in Istanbul and a huge canal that would render a large chunk of the city an island.

Some analysts and opposition politicians have expressed concern that the fund would lead to greater political control over state assets and a decrease in outside oversight.

Additional reporting by Daren Butler and Ezgi Erkoyun; Writing by David Dolan; Editing by Daren Butler

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