Erdoğan fires Turkey Wealth Fund CEO Sönmez, hires ex-press consultant

President Recep Tayyip Erdoğan fired Turkey Wealth Fund Chief Executive Officer Zafer Sönmez, a career banker and fund manager, replacing him with an ex-adviser.

Erdoğan brought in Salim Arda Ermut, a former press consultant at the prime ministry and head of a state-run investment agency, to replace Sönmez, according to a decision published in the Official Gazette on Tuesday. Ermut had stepped down as a board member of the fund in late November.

Ermut had resigned from the fund on the same day as Erdoğan’s son-in-law and ex-Treasury and Finance Minister Berat Albayrak, who served as its deputy chairman. Albayrak also left his ministerial post in early November, citing health reasons, after the lira sank to a record low.

The Turkey Wealth Fund, worth about $30 billion in assets, controls the country’s biggest state enterprises. The firms include the three largest state-run banks, Turkish Airlines and phone operators Turkcell and Türk Telekom. Erdoğan made himself chairman after gaining vast new executive powers at elections in July 2018. The fund was established in 2016.

Ermut was a former classmate of Erdoğan's son Bilal at a religious school in Istanbul, the Evrensel newspaper reported on Tuesday.

Ermut became a press consultant for Erdoğan in 2005, when Erdoğan was prime minister, after graduating from the political science and international relations department of Istanbul’s Boğaziçi University. He joined the Investment Support and Promotion Agency of Turkey the same year and served as its chief between 2015 and February 2020. He was a board member of the wealth fund from 2018 until his departure.   

The appointment of Ermut is the latest in a reshuffle of the management of some of Turkey’s key economic and financial organisations.

On Monday, Mehmet Hakan Atilla, a former executive of state-run Halkbank who was jailed in the United States in 2018 for helping Iran to evade U.S. sanctions, stepped down as the chief executive of Borsa Istanbul, the country’s main stock exchange. In November, Erdoğan sacked and replaced central bank governor Murat Uysal, bringing in Naci Ağbal, his former finance minister. He also appointed ex-prime minister Lütfi Elvan to replace Albayrak.

Albayrak, who has disappeared from public life, plans to set up a consultancy business in Istanbul for international and local firms, prominent Turkish columnist Fatih Altaylı said in January.

Sönmez became head of the wealth fund in September 2018. He is a former director of Khazanah Nasional Berhad, the sovereign wealth fund of Malaysia, where he had served since 2012. He previously worked for the Royal Bank of Scotland as a director.

The fund injected 21 billion liras ($2.75 billion) of capital into the state-run banks under its control last year to help them lend more to the economy during the COVID-19 pandemic.

The banks helped the government engineer a borrowing boom, which pushed the lira to record lows against foreign currencies as demand for imports climbed and the central bank kept interest rates at below inflation.

Last year, the wealth fund abandoned plans to sell $2 billion of bonds, citing unfavourable market conditions. It bought a controlling stake in Turkcell, the country's biggest mobile phone company, in 2020 and acquired the state-run Vakıfbank from the Treasury. 

(This story was corrected to show Ermut was reportedly a classmate of Erdoğan's son Bilal, not Berat Albayrak, in the fifth paragraph.)