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

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 Detains Over 200 for 'Illicit Money Transfers' to US

Turkish police detained Tuesday over 200 people in a major nationwide crackdown on illicit money transfers to individuals of Iranian-origin living in the United States.

An Istanbul court issued arrest warrants for a total of 417 suspects and have so far rounded up 216 in a nationwide operation carried out in 40 cities, the official Anadolu news agency reported.

The suspects are facing charges including criminal conspiracy and violating measures to prevent terrorism financing, Anadolu said.

There were no further details on who the suspects are. 

An investigation found that from the beginning of 2017 some 2.4 billion lira (USD 400 million) had been transferred from Turkey to a total of 28,088 accounts abroad from several banks, it added. 

Those conducting the money transfers earned "commissions", Anadolu said, citing the investigation, while the large majority of the recipients of the funds were people of Iranian origin living in the United States.

There were no further details on who these individuals were and if the transfers had an overall aim.

The arrests come as the United States is in the process of reimposing sanctions on Iran after Washington pulled out of a 2015 international deal limiting the nation's nuclear programme, including on Iran's ability to use the international financial system and export oil.

They also come several months after Turkey-US relations hit a rough patch over the detention of a US pastor, with US President Donald Trump making comments that sent the Turkish lira tumbling.

Sanctions busting has also been a source of tension between Washington and Ankara.

US authorities earlier this year convicted Mehmet Hakan Atilla, deputy director general of Turkish lender Halkbank on charges of helping Iran evade US sanctions on billions of dollars of oil proceeds.

In the case, Iranian-Turkish trader Reza Zarrab, who was once close to the Ankara authorities, turned whistleblower and gave evidence accusing the Turkish leadership of being complicit in the scheme. 

Turkey depends on foreign suppliers including Iran for its energy needs. The country imports oil and natural gas from Russia as well as from neighboring Iran.

Photo Credit: Depositphoto