Ilhan Tanir
Nov 23 2017

Oil-for-gold case judge rules no more delays

The U.S. federal judge trying the case against two Turkish citizens accused of breaking sanctions against Iran ruled that no further submissions would be accepted from either prosecution or defence and the long-awaited trial, potentially damaging to U.S.-Turkish relations, would begin on Dec. 4 or possibly even before.

Lawyers for one of the defendants, Turkish-Iranian gold trader Reza Zarrab, were again absent from the pre-trial hearings and made no submissions, making it look increasingly sure that he is preparing to enter, or has already agreed, a bargain with prosecutors to plead guilty and give evidence in return for a lighter sentence.

Lawyers for his co-defendant meanwhile, former deputy general manager of Turkish state-owned Halkbank, Mehmet Hakan Atilla, have held days of meetings with prosecutors, led by Acting U.S. Attorney for the Southern District of New York Joon H. Kim, but failed to resolve outstanding issues.

In a letter submitted to the court, Kim asked U.S. Federal Judge Richard Berman to rule on the disagreements, including the scope of expert testimonies and the admissibility of evidence.

Acting U.S. attorney Joon Kim introduces U.S. Attorney General Jeff Sessions as he arrives to make a statement regarding national security in New York, U.S., November 2, 2017. REUTERS/Lucas Jackson
Acting U.S. attorney Joon Kim introduces U.S. Attorney General Jeff Sessions as he arrives to make a statement regarding national security in New York, U.S., November 2, 2017. REUTERS/Lucas Jackson

Berman issued a series of rulings within the space of a few hours in an apparent attempt to avoid any further delay to the trial. The trial had been originally due to start in October, but was then put back to Nov. 27 and finally postponed by one more week.

“No further submissions by either party will be considered,” Berman said.

Jury selection is to begin on Nov. 27 and the trial will start in New York on Dec. 4.

Zarrab is charged with running a complex scheme to evade U.S. sanctions imposed on Iran over its nuclear programme by selling gold to the Islamic Republic in return for oil. Atilla is accused of helping to launder the proceeds through Halkbank. Seven others, not in U.S. custody, are also charged with involvement in the plot, including a Turkish former economy minister accused of taking bribes to cover it up.

If he does turn state’s witness, Zarrab could testify against Atilla.

The case has led to a marked deterioration in Turkey’s already strained relations with the United States, with some in Ankara accusing Washington of attempting to orchestrate a second coup to overthrow the government of President Recep Tayyip Erdoğan.

The issues between the prosecution and Atilla’s defence lawyers give some hint of the arguments to be made by the state and the defence at the trial.

Mehmet Hakan Atilla, a deputy general manager of Halkbank, is shown in this court room sketch as he appears in Manhattan federal court in New York, New York, U.S., March 28, 2017. REUTERS/Jane Rosenberg
Mehmet Hakan Atilla, a deputy general manager of Halkbank, is shown in this court room sketch as he appears in Manhattan federal court in New York, New York, U.S., March 28, 2017. REUTERS/Jane Rosenberg

The first disagreement was over one of the expert witnesses for the defence, senior sanctions advisor at the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), David J. Brummond, between 2006 and 2014. The prosecution said the defendant’s request from the Treasury to allow him to testify was not complete.

Berman denied the prosecution’s motion, allowing Brummond to testify. He also denied a defence motion to preclude a current OFAC expert witness.

Therefore, according the final verdict of the judge on Wednesday evening, two OFAC witnesses from both parties, one former and one current, will testify in the trial.

The prosecution also questioned whether defence witness Indiana University Turkish language professor Öner Özçelik was qualified to testify on the political conflict “between the Erdoğan (government) and Gülen-ist movement in Turkey.

Turkey blames followers of U.S.-based preacher Fethullah Gülen for carrying out last year’s failed coup attempt to overthrow Erdoğan.

The judge granted the prosecution motion in part, limiting Özçelik’s testimony to his field, particularly to “certain relevant recordings, and what the tone suggests about the relationship generally between the parties participating in the phone calls”. Phone tap evidence between the defendants and possibly Turkish government officials is thought to make up part of the case against Atilla and Zarrab.

Atilla’s lawyers requested to cross-examine prosecution witnesses, Mark Dubawitz and Jonathan Schanzer, who are the CEO and senior vice president of the Foundation for Defense of Democracies, a Washington D.C.-based think tank, arguing that the undisclosed donors of the organisation may bias the witnesses’ statements.

Berman limited that motion to the public donors if it is relevant to the witnesses’ credibility.

United States District Court, South District of New York. U.S.A against Mehmet Hakan Atilla, 15 CR.867 (RMB), Order issued on Nov. 22, 2017 by Judge Richard Berman.
United States District Court, South District of New York. U.S.A against Mehmet Hakan Atilla, 15 CR.867 (RMB), Order issued on Nov. 22, 2017 by Judge Richard Berman.

Atilla’s lawyers also requested a clarification note to be given to the jury stating he was not charged with any crimes in Turkey, and that the term “economic jihad,” allegedly used in the letters between Iranian gold trader Reza Zarrab and the Iranian leadership, does not mean that the former Halkbank official can be associated with terrorist groups.

Agreeing that Atilla was not charged with terrorism in the indictment, the prosecution maintained he was charged with assisting certain Iranian entities that are designated by the United States for their help to terrorist groups. U.S. Attorney Kim added that the prosecution was planning to use “economic jihad” in its opening statement.

Berman granted that the defence may instruct the jury that Atilla is not charged with terrorism offences, but agreed with the state’s version regarding association with groups designated as terrorists by the United States.