Stockholm (Ekonamik) – Turkey’s majority state-owned Halkbank has been charged by New York prosecutors with participating in a multi-billion dollar scheme to evade U.S. sanctions on Iran.
“The bank’s audacious conduct was supported and protected by high-ranking Turkish government officials, some of who received millions of dollars in bribes to promote and protect the scheme,” Geoffrey Berman, the U.S. attorney for the Southern District of New York, said Tuesday. An estimated $20 billion worth in Iranian funds were transferred illegally, according to the prosecutors, with the bank facilitating transactions designed to get around sanctions placed on Iran in the guise of humanitarian purchases. The money stems from sales made from Iran’s national oil company to Turkey, it is alleged.
A former Halkbank executive, Mehmet Hakan Atilla, was sentenced to prison on similar charges last year. The criminal case dates from 2016, when Resa Zarrab, a Turkish-Iranian banker and gold trader was arrested in Florida on suspicion of involvement in the scheme. Mr Zarrab testified at Mr Atilla’s trial that Halkbank and Turkish government officials – including Turkey’s president Tayyip Recep Erdogan – used shell companies, bribes and fake transactions in gold, food and medicine to circumvent U.S. sanctions. Mr Zarrab is said to have been close with Mr Erdogan.
Meanwhile, president Trump’s personal lawyer, Rudolph Giuliani appears to be implicated in the case as well, with both he and former U.S. Attorney General Marc Mukasey appearing on Mr Zarrab’s defense team, according to a letter sent by former acting U.S. Attorney Joon Kim in the Zarrab case. He suggested that “Mr Giuliani and Mr Mukasey’s involvement in the case is intended to occur entirely outside of the Court’s purview and knowledge.” The pair allegedly also visited Mr Erdogan in Turkey to be briefed on the case.
The indictment is likely to complicate relations further between the U.S. and Turkey as relations are already under strain due to the Turkish incursion in northern Syria and contradictory statements coming from the White House, muddying waters further between the NATO allies. U.S. president Donald Trump announced additional sanctions Monday and signed and Executive Order to punish Ankara for the invasion, after seemingly green-lighting it last week.
Markets apparently did not react seriously to the latest round of sanctions, with the Turkish lira rising Tuesday on expectations that they wouldn’t be harmful to Turkey’s economy. U.S. vice president Mike Pence will meet with Mr Erdogan on Thursday to reemphasise Washington’s commitment to the new sanctions on Turkey. Meanwhile, it is open to question what further involvement administration officials have had with the Halkbank case.