A new delay emerges in court proceedings of Halkbank sanctions busting case

A new hearing on Tuesday in the court case against Turkey’s Halkbank was delayed at the request of the bank’s defence team.

In a brief letter to Judge Richard C. Berman of the Southern District of New York, Halkbank’s lead attorney Andrew C. Hruska from white-shoe law firm King & Spalding asked for more time to attain a document from his client that was requested by the judge in last week’s hearing. The document in question is written approval that King & Spalding will serve as Halkbank’s legal counsel in the case after previously providing only limited representation.

According to Hruska’s letter, the matter will be addressed at the next meeting of Halkbank's board of directors on March 27.

“Given this process, we hope to have the letter by March 31, 2020. We respectfully request that the control date status conference now set for March 3 be rescheduled for a date following March 31,” it said. 

Last week’s announcement that Halkbank would appear in court was a major turn-around following repeated refusal to do so after being indicted on Oct 15, 2019 for what is considered the largest sanction-violations case to date by U.S prosecutors.

Halkbank stands accused of laundering up to $20 billion on behalf of Iranian entities, bank fraud charges, and concealing the nature of these illicit transactions from U.S officials. In the initial indictment, Halkbank’s senior managers are accused of “systematic participation in the illicit movement of billions of dollars’ worth of Iranian oil revenue was designed and executed by senior bank officials.”

Twice the bank was absent in legal hearings, instead seeking a right to a special-appearance that would not require its representatives to physically appear for fear it would imply acknowledgment of the charges filed against it. Prosecutors in November said Halkbank refused to even accept a physical delivery of the indictment through FedEx to its Istanbul headquarters.

Frustrated with its refusal to appear in court, prosecutors previously demanded Halkbank be fined $1 million for every day it does not turn up to proceedings. An escalating fine on top of a large penalty if found guilty would have been a devastating blow to Halkbank, the Turkish banking sector and the wider economy.

Through King & Spalding, Halkbank filed an appeal with the Court of Appeals for the Second Circuit and was granted a temporary stay in proceedings earlier this month.

Their appeal however was rejected on Feb 21 in a paragraph long letter from the appellate court, because the “Petitioner has not demonstrated that it lacks an adequate alternative means of obtaining relief, that its right to the writ (of mandamus) is clear and indisputable, or that granting the writ is appropriate under the circumstances.”

Today’s control hearing was intended to outline the path going forward in the case. Judge Berman told both sides last week that he wanted to see this case move quickly following previous delays and issued a legal order for documentation to speed it up.

While this delay is only the latest of many by Halkbank, it does not suggest that the bank is returning to uncooperative behaviour.

Last week, Hruska, the lead litigator for the defence, told reporters that Halkbank looks to cooperate going forward and in a statement shared by the bank, Halkbank said that it “...will aggressively defend itself against the indictment brought last year by the U.S. Attorney’s Office for the Southern District of New York.”

The control hearing in the case is rescheduled tentatively for March 31 and was confirmed by a court official to Ahval. 


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