Halkbank Wins Reprieve in U.S. Prosecution Over Iran Sanctions

By Christian Berthelsen

A federal appeals court granted a temporary halt in the U.S. prosecution of Turkish lender Halkbank over sanctions violation charges while it weighs other requests by the bank.

Halkbank had previously sought to pursue a dismissal of the case without entering a plea on the charges. A judge denied the request, and the bank is appealing that ruling. A three-judge panel of the Second Circuit Court of Appeals will weigh the request on an expedited basis.

Prosecutors have deemed the bank a fugitive from justice, asking a judge to hold it in contempt and impose fines until it begins answering the charges.

Halkbank, which is owned by the Turkish government, was charged in October with helping Iran access billions of dollars in oil revenue that had been frozen in its accounts under U.S. sanctions. A senior bank executive was previously convicted in the case, and a money launderer pleaded guilty to charges of orchestrating the scheme.

The case has become a persistent thorn in the side of Turkey’s president, Recep Erdogan, who has pressed President Donald Trump to intervene. The charges were brought at the height of tensions between Washington and Ankara over Turkey’s military offensive in Syria. The geopolitical context is complicated by Trump’s campaign to hobble Iran.

Photo: Halkbank

Halkbank Charged in U.S. Indictment With Fraud, Laundering

By David Glovin

U.S. prosecutors filed criminal charges against Turkey’s Halkbank, accusing it of fraud, money laundering and violating U.S. sanctions against Iran, in a case that Turkish President Recep Erdogan had pressed both President Donald Trump and President Barack Obama to dismiss.

Prosecutors accused the bank of participating in a sweeping scheme to violate prohibitions on Iran’s access to the U.S. financial system, involving high-ranking government officials in Iran and Turkey.

The indictment was filed Tuesday in Manhattan federal court.

Senior Halkbank management’s participated “in this brazen scheme to circumvent our nation’s Iran sanctions regime,” U.S. Attorney Geoffrey Berman said in a statement. “Halkbank’s systemic participation in the illicit movement of billions of dollars’ worth of Iranian oil revenue was designed and executed by senior bank officials.”

Two people were previously convicted in the case, which led to the airing in a Manhattan courtroom of many of Halkbank’s activities.

At the center of the U.S. case was Reza Zarrab, a flamboyant Turkish gold trader who said he’d helped Iran tap funds from overseas oil sales that was frozen in foreign accounts. He became the star witness in the case against a Halkbank executive, Mehmet Hakan Atilla, who was convicted in early 2018.

The proceedings gripped Turkey. Some testimony sent its markets into gyrations, in part because prosecutors aired evidence that tied the scheme to Turkish officials and their families. An ex-finance minister was charged in absentia.

Zarrab, who’s married to a Turkish pop star, had a tabloid lifestyle of yachts, fast cars and an office in a Trump Tower in Istanbul. After he was detained during a 2016 trip to the U.S., he added Rudy Giuliani, Trump’s confidante, to his legal team.

Giuliani attempted to broker a diplomatic deal with Turkey to extract Zarrab from U.S. custody, attempting to swap him for an American pastor, Andrew Brunson, who was in Turkish custody.

Giuliani’s role apparently went deeper. At Giuliani’s urging, in the second half of 2017, Trump asked then-Secretary of State Rex Tillerson to press the Justice Department to drop its case against Zarrab, Bloomberg News reported last week.

Giuliani, in an interview last week, said he talked to the State Department in his role as Zarrab’s lawyer and said he behaved ethically and legally. He would have been a hero had he arranged the swap with Brunson, he said.

Photo: Halkbank

Erdogan Vows to Continue Oil, Natural Gas Trade With Iran

Turkish President Recep Tayyip Erdogan vowed Ankara would continue to purchase oil and natural gas from Iran despite US sanctions in comments published on Friday.

The United States reimposed sanctions on Iran after pulling out of the landmark 2015 nuclear deal, and says it aims to reduce Tehran's energy sales to zero.

"It is impossible for us to cancel relations with Iran with regards to oil and natural gas. We will continue to buy our natural gas from there," Erdogan told Turkish reporters before leaving New York where he was attending the UN General Assembly.

Despite this vow, Erdogan admitted Turkey faced difficulty in purchasing oil since the private sector "pulled back because of US threats", NTV broadcaster reported.

"But on this issue especially and many other issues, we will continue our relations with Iran," he promised, adding that Ankara still sought to increase trade volume with Tehran.

He previously criticized sanctions against Iran, insisting that they achieved nothing.

Turkey and Iran have been working closely together with Russia to resolve the eight-year conflict in Syria despite being on opposing sides of the war.

Photo: Wikicommons

Turkish Banker Released from US Prison

A Turkish banker convicted for plotting to help Iran evade American sanctions on Iranian oil proceeds has been released from US prison, according to his lawyer and prison officials.

Mehmet Hakan Atilla, 47, deputy director general of Turkish lender Halkbank, was arrested in March 2017 and convicted the following year on five counts of bank fraud and conspiracy following a five-week trial in New York.

He was handed over to immigration police on Friday pending his deportation to Turkey, his lawyer Victor Rocco told AFP. Prison authorities confirmed his release.

Atilla claimed that he had only played a minor role in the scheme and acted as executor of instructions by the bank's director general -- an argument accepted by the court.

Prosecutors had wanted a 20-year sentence for the banker.

His conviction hinged on the testimony of Turkish-Iranian gold trader Reza Zarrab, who was arrested by US authorities in 2016 after jetting to Florida with his pop-star wife and child on a family holiday to Disney World.

Zarrab, 34, initially pleaded not guilty then flipped, becoming a US government witness after admitting being involved in the multi-billion-dollar gold-for-oil scheme to subvert US economic sanctions against Iran.

His testimony identified Atilla as a key organizer in the scheme, but also implicated former Turkish ministers and even President Recep Tayyip Erdogan.

Testifying in court last November, Zarrab said he was told that Erdogan, as prime minister in 2012, and treasury minister Ali Babacan gave "instructions" to two public banks to take part in the scheme.

Erdogan has repeatedly rejected the allegations, saying Turkey did not violate the US embargo on Iran and that political rivals were behind the case.

Zarrab's sentence is not known, as many of the documents in his case have remained confidential.

Photo: Halkbank

Turkey Hopeful US Will Extend Waiver on Iran Sanctions

Turkey voiced hope Tuesday that the United States will extend an exemption in sanctions to allow it to keep buying oil from Iran, despite tensions between the allies on multiple fronts.

Turkish Finance Minister Berat Albayrak met President Donald Trump at the White House on Monday and discussed the range of disagreements including Ankara's major weapons purchase from Russia, said Ibrahim Kalin, the spokesman for President Recep Tayyip Erdogan.

"It was a positive meeting overall," Kalin told reporters in Washington.

Kalin said Turkey was hopeful that the Trump administration would issue another waiver for Turkey after last year demanding that all nations stop buying oil from Iran.

"Certainly we are expecting an extension for Turkey," Kalin said, adding that Ankara has not received a formal notice.

The United States has given six-month exemptions to eight countries -- China, Greece, India, Italy, Japan, South Korea, Taiwan and Turkey—that run out on May 2.

Kalin said Turkey had reduced its imports from Iran despite disagreeing with the US sanctions, which Trump imposed unilaterally after pulling out of an international accord under which Tehran drastically scaled back its nuclear program.

"People should not expect Turkey to turn its back on Iran just like that," he said, pointing to the countries' shared border and historic relationship.

"We want to maintain good relations with Iran and we believe that the way to deal with Iran is more engagement rather than more sanctions."

Relations between the United States and Turkey deteriorated after the NATO ally said it would buy the S-400 missile defense system from the alliance's main nemesis Russia.

The United States has responded by suspending Turkey's participation in the key F-35 fighter-jet project.

Kalin renewed Turkey's offer to form a joint committee to examine US concerns that Russia would gain data in Turkey to help the S-400 system shoot down the Western planes.

He said that Russian air defenses are already operating in war-torn Syria, where Israeli F-35s frequently enter the airspace.

“When you consider the airspace in the region, it should be very easy for Russians to gain access to that sensitive data already," Kalin said. 

"If they are waiting for Turkey to install these S-400s in Turkey to get that information, that wouldn't make sense."

Kalin was in Washington to participate in a conference of the American-Turkish Council, a business group, at the Trump International Hotel.

Photo: Turkish Government