Unsealed documents reveal Turkey’s Halkbank being sued in U.S. courts

Turkey’s state-run Halkbank, already facing trial in the United States over allegedly breaking sanctions on Iran, is being sued in a separate lawsuit in U.S. courts.

In the recently unsealed lawsuit, shared on Twitter on Friday by Courthouse News reporter Adam Klasfeld, victims of terrorism attacks argue that Halkbank's alleged actions to violate sanctions helped Tehran hide money that could have been used to pay their litigation against the Iranian government.

“The Islamic Republic of Iran - working arm-in-arm with Halkbank and others - has engaged in a highly calculated campaign to evade detection of its capital and asset flows into and out of the U.S. financial markets,” the lawsuit stated.

It said Iran’s evasion of U.S. sanctions was orchestrated through the transfer of billions of dollars’ worth of funds to Halkbank, with the expectation that the Turkish state-run bank would disguise Iranian oil proceeds by transferring them to other partners in the scheme.

“The transfers at issue were made while Plaintiffs - the victims of acts of terrorism sponsored by Iran - were litigating their claims against Iran. Plaintiffs’ judgments, totalling more than $10 billion, have never been satisfied by Iran,” it said.

A lawsuit was reportedly filed under seal in the South District of New York (SDNY) federal court on March 21, 2020 and a judge unsealed the case on July 16, according to a document also shared on Twitter by Klasfield.

Sealing is generally known as the process of removing the records pertaining to a court case from general view; usually for the safety of the individuals involved.

According to the document, the plaintiffs had requested this case against Halkbank remain under seal, but a federal judge ruled in July that there had not been an adequate reason to justify the case remaining under seal.

Halkbank said on Friday that it operates in full compliance with national and international regulations and that the lawsuit against it will be unsuccessful.

"Similar unsuccessful attempts, involving some of the same plaintiffs here, have been made in the past against other international banks," state-run Anadolu news agency cited Halkbank as saying in a statement.

"However, not only are the claims against the bank false, but they also have nothing to do with the aforementioned plaintiffs’ judgements against Iran, and they do not in any way impact the satisfaction of those judgements,” Halkbank said.

Halkbank has been the subject of several trials that have implicated the Turkish government in billions of dollars of trade that allegedly violated U.S. sanctions on Iran. Turkey’s government denies any complicity.

In February, Halkbank agreed to appear in the Manhattan federal court for arraignment after refusing for months to face the SDNY court since being indicted on Oct. 15, 2019 for what is considered the largest sanction-violations case to date.

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.

Former U.S. security advisor John Bolton, in his book “The Room Where It Happened”, released in June, said that in 2018 Trump offered to help Turkish President Recep Tayyip Erdoğan with the sanctions-violation investigation into Halkbank.

In May 2018, Erdoğan provided Trump with a memo maintaining the innocence of Halkbank, to which he allegedly has personal ties.

Prosecutors with the Southern District identified Erdoğan and his son-in-law, Turkish Finance and Treasury Minister Berat Albayrak, as unnamed co-conspirators in the indictment of Mehmet Hakan Atilla, a senior official of Halkbank who was convicted of financial fraud.

Erdoğan repeatedly asked Trump to return Atilla to Turkey. According to Bolton, Trump promised Erdoğan he would “take care of things” and told his Turkish counterpart that Berman’s prosecutors "were not his people, but were Obama people," and the problem would be fixed when they were replaced by Trump.

In October 2019, Atilla was appointed as the director general of Borsa Istanbul, Turkey’s main stock exchange.

Geoffrey Berman, one of the country’s most important organised crime prosecutors who was leading the prosecution of Halkbank, agreed to step down in June after being fired by Trump.