Sea Platforms

Turkish Milgem and LPD naval projects allegedly rigged

12 March 2014
Leaked audio recordings of Turkish Prime Minister Recep Erdogan have raised serious allegations over whether there was interference in the conduct of the Milgem and LPD naval programmes. Source: SSM

Turkish opposition parliamentary deputies have submitted motions to the Turkish government over allegations of rigging Turkey's Milli Gemi/National Ship (Milgem) corvette programme and Landing Platform Dockship (LPD) tenders.

The allegations stem from leaked audio recordings on 4 March, suggested to be of Turkish Prime Minister Recep Tayyip Erdogan instructing the owner of Sedef Shipbuilding, Metin Kalkavan, on how to engineer the cancellation and reopening of the Milgem programme, while advising him over competitive pricing for the LPD programe.

On 5 March, Erdogan confirmed the authenticity of two separate phone conversations said to have taken place in April and September 2013.

In the April 2013 recording, Erdogan appears to ask Kalkavan to lodge a complaint with the Prime Ministry Inspection Board that the correct procedures in the Milgem competition had not been carried out. This is despite the fact that Kalkavan appears to tell Erdogan that Sedef Shipbuilding did not even apply to officially take part in the tender.

Erdogan justified his phone conversation by saying that Sedef Shipbuilding had been sidelined during the tender, and Kalkavan had appealed to him. But, if genuine, the recording shows that Erdogan also instructed Kalkavan to apply for the bid.

On 26 September 2013, the Executive Committee (EC) of the Turkish Undersecretariat for Defence Industries cancelled its contract with RMK Marine, a subsidiary of Koc Holding, for the series production of six follow-on Milgem corvettes, worth about USD2 billion. The decision came after the Prime Ministry Inspection Board concluded that the tender violated the rules of the competition and was not in the public's interest.

The inspection office initiated an investigation into the Milgem tender after receiving a tip-off from Sedef Shipbuilding - IHS Janes learnt - that Sedef Shipbuildinghad not been invited to the tender. However, this was two years after the Milgem contract was awarded to RMK Marine in 2011.

Press reports at the time linked the inspectors' probe into the Milgem contract negotiations with RMK Marine to a possible Turkish government reaction against Koç Holding after one of its hotels in Istanbul sheltered anti-government figures in May 2013.

In a 27 December 2013 meeting of the EC, almost three months after the Milgem tender was cancelled, Kalkavan's Sedef Shipbuilding company was selected for the USD1.1 billion LPD project.

As a result of the recordings, opposition deputies have submitted motions in the Turkish parliament asking the government to clarify allegations that Erdogan instructed Kalkavan to engineer the Milgem tender. In addition, Sezgin Tanrikulu, a deputy from the main opposition Republican People's Party (CHP), stated on 6 March that the price of the LPD project suddenly rose from EUR800 million (USD1.1 billion) to EUR1.2 billion due to a last-minute change made on the configuration of the vessel.

Tanrikulu asked the government whether the LPD programme was reconfigured to allow it to stage operations for the short take-off and vertical landing (STOVL) F-35B Joint Strike Fighter, despite the fact that Turkey would not buy this model. Turkey has officially announced that it will procure 100 conventional take-off and landing (CTOL) F-35A aircraft. In addition, he questioned why the LPD project was configured with a ski jump.

Tanrikulu also asked whether the cost of the project was increased to donate around EUR200 million to a charitable foundation, the Service for Youth and Education Foundation of Turkey (TÜRGEV), of which Erdogan's son Bilal is a board member.



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