Turkey’s Halkbank to fight to stop U.S. lawsuit

Turkey’s second largest state-owned bank Halkbank will utilise all its legal rights to stop the legal proceedings in the United States against it, the bank announced in a statement released on Friday.

On Oct. 16, a federal court in New York indicted Halkbank with fraud, money laundering, and sanctions offences related to the bank’s participation in a multibillion-dollar scheme to evade U.S. sanctions on Iran.

The charges are related to the conviction of former bank executive Mehmet Hakan Atilla, who served 32 months in a U.S. prison for running the evasion scheme that allowed the Iranian government to spend money abroad using fraudulent food and gold transactions through Halkbank.

In the statement released on Friday, Halkbank said Judge, Richard Berman had not been neutral and called for him to be recused.

“The statements the current judge has made in the courtroom and elsewhere have cast a shadow on his neutrality on the key factual and legal matters regarding the indictment. The current judge continuing to chair the court will lead to the questioning of the court’s neutrality as well,” the bank said.

The New York Southern District Court on Thursday rejected Halkbank’s request for law firm King & Spalding to enter a special appearance on its behalf, and Judge Richard Berman gave the bank a choice between appearing in court for arraignment or face the risk of contempt of court.

“[The court] would almost certainly conclude that the fugitive disentitlement doctrine applies and that the doctrine’s principles would render Halkbank a fugitive,” Berman said.

“It is a valid practice to allow for special appearance in order to allow for appeals regarding procedural matters such as jurisdiction and recusation in precedent cases in the United States,” Halkbank said.

Halkbank said U.S. courts have no jurisdiction over the bank, as it has no branches or physical operations within the United States.

A year-long investigation by Halkbank has shown that the bank was not involved in any schemes, did not violate rules on U.S. sanctions or use non-transparent practices or methods in foreign trade transactions, it said.