(^) Daily Mail, Wednesday, August 21, 2019
F
or British Steel, it
must have looked
like an unmissable
second chance for a
once-proud business
on the brink of collapse.
After weeks of desperately
searching for a white knight, the
company seems to have finally
found its unlikely saviour in
oyak, a Turkish military
pension fund.
In just two months the ailing met-
als firm, which has been on tax-
payer-funded life support since
running out of money in May, will
be bought for £70m, hopefully safe-
guarding almost 5,000 jobs.
But amid the euphoria over the
rescue, there are questions over
whether this vital national asset
should be allowed to fall into the
hands of a foreign power without
any safeguards in place – particu-
larly one which seems to be drifting
ever further away from the West.
Tory MP Julian Lewis, chairman
of the Defence Select Committee in
Parliament, spoke for many this
week when he said: ‘No industry
with a strong defence dimension
should pass out of the control of
British firms and jurisdiction.’
oyak looks after the retirement
savings of 360,000 current and
former Turkish soldiers but is theo-
retically independent from the
increasingly authoritarian govern-
ment. Its chairman, Mehmet Tas,
was a major general earlier in the
reign of Turkey’s autocratic leader
recep Tayyip Erdogan.
And this May, oyak bosses hosted
the Turkish defence minister and
head of armed forces at its annual
meeting. Meanwhile, Erdogan has
spent the last two years cosying up
to russian president Vladimir Putin
over Syria, as the Turkish economy
fights recession in the aftermath of
a currency crisis.
Although Turkey remains a mem-
by Tom Witherow
Buyer is run by general and has ties to authoritarian regime
Can Turkish
army fund
REALLY be
trusted with
our steel?
ber of Nato alongside the US
and UK, Putin and Erdogan
have grown increasingly close
over the past two years and
have held frequent talks over
the future of war-torn Syria,
where they officially support
opposite sides.
And Erdogan has shocked
many observers with his dicta-
torial behaviour, locking up dis-
sidents and journalists and
sacking the head of the coun-
try’s central bank over a slide in
the lira.
In a fiery speech last year, he
even urged Turks to sell their
gold and dollars to shore up the
country’s currency.
oyak has also raised eyebrows
due to its tempestuous past.
In 2012, it was accused of cor-
ruption by the Turkish parlia-
ment, for misusing government
construction permits, and in
2018 a former chairman – Yildirim
Turker – another retired general,
was sentenced to life imprison-
ment for his involvement in a
1997 military coup.
Despite these concerns,
British Business Secretary And-
rea Leadsom has stood by the
move to pick the Turkish mili-
tary pension fund as British
Steel’s preferred buyer, calling
it an ‘important and positive
step’, and reassuring MPs in
steel constituencies.
To sell British Steel under
such circumstances shows the
lengths to which the Govern-
ment will go to protect steel-
workers’ jobs and neutralise
potential criticism ahead of a
looming election. Ministers have
so far shown only a fleeting con-
cern over the Turkish question.
one official involved in the
talks said: ‘There was never any
feeling or sight of Turkish politi-
cal interest, but then I’m not
saying there wouldn’t be if the
deal came off.’
In response, oyak has said
that it is run by independent
managers and that it does not
receive contributions from the
Turkish government.
Looking beyond geopolitics,
the company seems to be a
promising bidder. It is a far cry
from Greybull Capital, the
super-rich financier which took
British Steel into administra-
tion in May.
Firstly, oyak has owned
Erdemir, Turkey’s biggest steel
producer, since 2005, and is a
serious player in the European
industry. It is also a pension
fund with assets of £15bn, and is
seen as a long-term investor.
The fund already has numer-
ous industrial interests in min-
ing, cement, energy and car
making across Europe.
E
ArLY signs also sug-
gest bosses are willing
to put money behind
their ambition to
modernise Scunthorpe’s blast
furnaces, offering a reported
£900m to help make the UK its
laboratory for high-tech, hydro-
gen-fuelled steel production.
oyak also said it wants to
boost output from 2.8m to 3.2m
tonnes per year in the process.
But this is not the first time
the fanfare has been sounded to
celebrate the dawn of a new
future for British Steel.
The Greybull deal was hailed
as a ‘new start, and a new chap-
ter’ when it was completed in
June 2016.
Three years later, the compa-
ny’s erstwhile private equity
rescuers were themselves ask-
ing for bailouts while stripping
up to £20m out of the company
each year in debt interest and
fees. Last week, trade unions
gave a lukewarm response to
the Turkish bidders, as oyak
refused to rule out several hun-
dred job losses.
The GMB union said the con-
tinued uncertainty meant
workers are staring redun-
dancy in the face, while Unite
said it is ‘a matter of urgency’
that oyak reveals its plans.
Cutbacks would represent a
brutal blow, especially after
ministers’ warm reception of
the Turkish rescuers.
one of the reasons critics
doubt oyak’s promises is its
decision to move a separate
chemicals factory from Tyneside
to Turkey and Austria, blaming
Brexit uncertainty.
oyak said the Chemson fac-
tory, which makes additives
used in PVC plastics, will be
closed in September, leading to
64 redundancies.
There are also questions over
the viability of the £15bn pen-
sion fund’s hydrogen fuel plans,
which experts have warned are
extremely ambitious.
richard Warren, of industry
association UK Steel, suggested
the increased energy usage
could add up to 30pc to the cost
of production. He said: ‘You
would ask how British Steel
would remain competitive.’
The answer may be a burst of
taxpayers’ money. A £300m
sweetener has reportedly been
offered, but the Turks will prob-
ably demand more as formal
negotiations get under way,
experts said.
British Steel’s prospective
Turkish owners have already
been hustled in to meet Boris
Johnson, shortly before he
became Prime Minister.
Government insiders said the
potential buyers gave a ‘very
good’ pitch. Decision-makers
continue to be impressed by
their ‘energetic, ambitious and
positive’ vision for the industry.
In an industry that for decades
has only known setbacks, the
fund’s optimism is certainly
attractive and is likely to have
appealed to the Prime
Minister’s own vision for post-
Brexit Britain.
But the Government, keen to
learn the lessons from Greybull,
will know that it takes more
than words and promises to run
a successful company.
Foreign buyers so often claim
they are long-term investors,
who will keep operations in the
UK and protect jobs, while the
reality proves different.
Now ministers have two
months to grind out the details
and put assurances in place
that British Steel’s long-suffer-
ing workers and suppliers so
desperately seek. And questions
over oyak’s links to the regime
in Ankara remain.
360,000members in
Oyak’s pension fund
£15bnvalue of
fund’s assets
5,000skilled workers
at British Steel
29,000 jobs in British
Steel’s supply chain
2.8m tonnes of steel
produced at Scunthorpe
plant each year
£1 the price private equity
firm Greybull Capital paid for
British Steel in 2016
Page 66
Dictatorial: President Erdogan
on a military parade in Ankara
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