“Trustees block the system; foreign companies are worried…”

News - Dr. İzel Levi Coşkun - March 16, 2017

The question most frequently asked by foreign investors these days is “Will our business also be seized?” According to Mazars Denge’s executives there is a trauma and what foreign capital values the most is a fair judicial system.


Foreign businesses in Turkey are worried; some foreign executives have been replaced by Turks; they have so many questions… These words belong to Mr Leon Aslan Coşkun, Chairperson of Mazars Denge. What is the most frequently question asked by foreign investors? “Will my business also be seized?” says Izel Levi Coşkun, Mazar Denge’s CEO. According to him, appointed trustees cause a big blockage in the system.

According to Mr Coşkun, a lack of inspection of the trustee system poses a domino effect risk for the whole economy: “Trustees have been appointed to over 800 companies so far. Let’s assume 400 of those are SMEs. These companies have been managed in a certain way for some time; their managers have a certain management style. We replace those managers with new ones and expect the operations to carry out as usual. We even believe that their operations will improve, which will allow us to sell those companies at a higher price in the future. This to me is pure imagination; it simply cannot happen. Many of the trustee-appointed companies today are unable to collect receivables. There is a severe domino effect at this point. I believe this affects people’s lives and work, which results in significant distrust.

‘We must avoid cash outflow”

Mazars Denge’s Board Member Mr Taylan Baykut says that the trustee system adopts the principle of “If I don’t do anything, I won’t make any mistakes.” He explains why the system has been blocked in light of his experience:

“This is the legal framework for the trustee system: a trustee is appointed to put a company back on its feet rather than to destroy it…  The biggest problem in the market today is that trustees do not pay outstanding debts.  Their perception of the situation is: “We have been appointed as guards so we must avoid cash outflow.” However, those companies were not being managed properly according to the law. That is why they have been appointed trustees, the expectation is that they will be managed correctly now. However, trustee-appointed companies have stopped all payments. There is a large number of small businesses who cannot collect their receivables, which causes severe cash shortage.” He points out that competence is one of the factors underlying this problem and asks: “Can there be enough public officers who are qualified to act as CEO for those 800 companies? Would you appoint someone to those companies even if you thought that person would not make a good CEO for your company, for example? Mr Coşkun stresses that the solution lies in creating new fields and business for those companies rather than putting off problems.

Trustees need to be inspected

According to Mr Leon Aslan Coşkun, if all of a sudden the situation of a trustee-appointed company deteriorates even though its operations continue as normal, the appointed trustee must own the responsibility for it.  What is important here is inspection and accountability. Mr Coşkun continues: “Trustees need periodic auditing and reporting by independent units.” Mr Baykut comments: “Integrating a whole economy into a structure and hoping all will be good is as equally dangerous as destroying a whole system for one structure; they cause equal harm to a country.”

This trauma is worse than a crisis

Mr Baykut points out that foreign investors are worried and says that “Will my business also be seized?” is the question that they are asked most frequently. Mr Baykut says this is a trauma and continues: “Once a foreign investor fears something it is really difficult for them to get over it. When you experience an economic crisis things start looking up within 6 months and eventually everything will be forgotten. But such traumas are not easily forgotten. They will have a long-term impact. Mr. Leon Aslan Coşkun agrees with him:  “Crises are no source of fear for foreign businesses. What they value the most is judicial security. Where there is no judicial justice there will be no foreign capital. Existing foreign capital will also try to escape. Foreign investors may see a crisis as an opportunity but an eroding trust in the judiciary frightens them. Many foreign employees in the companies we work with went back to their home countries; they have been replaced by Turks.”

Mr Coşkun says the recent months saw an obvious fall in foreign investor interest but he is not hopeless: “I believe Turkey has great potential if trust can be built. We clearly feel this when we meet with foreign-capital companies’ executives. It is possible to experience a similar increase in foreign investment, just like in 2000-2005.  However the way to achieve this is to make certain swift political decisions rather than giving incentives because this is a political problem and a trust issue.”


Mazars Denge celebrates its 40th anniversary this year. Founded in 1977 as Denge, the firm now operates with 360 employees in 6 offices in İstanbul, Ankara, Bursa, Denizli, Gaziantep and İzmir. Having realised that a foreign partnership is inevitable, Denge became a part of the Mazars group in 1998, a Paris-based audit and advisory services organization. Today Mazars Denge serves a portfolio of 800 companies from different sectors with its 33 partners, of whom 16 are certified public accountants. Over half of these companies are international ventures.  Recently the company has been taking remarkable steps with regard to sustainability; it is the smallest-sized Turkish firm that signed UN Global Compact.

Mr İzel Levi Coşkun says that their Sustainability Report preparations are underway and that they plan to publish their report in April. He continues: “Recent events caused people to feel down; I can feel that. People don’t feel like going to work. Leaving the bed in the morning has become difficult. I believe half of economics is psychology and there is psychological depression going on right now. This is my formula: we wanted to concentrate on our values. We gave a survey and the results showed that we offer reliable, ethical, high-quality and exclusive services. We channelled all our employees towards embracing and protecting those values and towards being aware of the responsibility of the business we do. We gathered around our values. Our marketing director Mr Barlas Hünalp sent all employees a letter about our company values which looked like it was penned by Mr Leon Coşkun 40 years ago.  We asked them to write a letter to be sent 40 years into the future. All letters will be sealed and kept in a safe. Our marketing director wears the key to the safe around his neck. We try to keep morale high in our workplace using such methods.”


Leon Aslan Coşkun says “The best solution is not to have this referendum. Neither a yes vote nor a no vote will be good.  What matters to foreign businesses is the existence of a separation of powers; they see it as security.”

Unfair increase in pay could lead to chaos

İzel Levi Coşkun stresses that just like businesses, countries should be managed according to principals of corporate governance. He gives an example: “Businesses need fair management and accountability. This month traditionally is pay increase month. If we do not increase staff pay fairly there will be chaos at the company. Incentives will not work without fair management, transparency and accountability. Infrastructure efforts must be emphasised.”

Choose you clients carefully

► At times like this, one should avoid loans if possible

►Businesses must keep their expenses under control.

►Companies should be very diligent when choosing clients; so many companies are at risk of defaulting. Taking on a large number of clients for growth purposes is not the right strategy. Companies in difficulty may drag you down.

►Receivables should be monitored carefully in this period.

►I do not believe that any business can claim to be managing the currency risk well right now. The only way to manage currency risks is to create a dollar, lira and euro basket to spread the risk.


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