Ilhan Tanir
Dec 02 2017

Zarrab case: Prosecutors appear slowly building case against Atilla

In the first week of the U.S. trial of Turkish banker Mehmet Hakan Atilla, the confessed coordinator of the scheme to bypass sanctions on Iran, Turkish-Iranian gold trader Reza Zarrab has sought to come across as an obedient and respectful young man, repentantly trying to make amends for the sake of justice.

On his third day of testimony in a case that threatens to derail relations between the United States and Turkey, Zarrab went into detail about the “imaginary” food exports which was used to get money out of Turkey after new U.S. sanctions prohibited the gold exports in mid-2013.

According to prosecutors, Turkish state-owned Halkbank was instrumental in Zarrab’s illegal trade and together with its general manager, Süleyman Aslan, was again at the heart of the court proceedings. Recordings of conversations between Zarrab and Aslan were played in court, as well as recordings of Zarrab speaking to Atilla, Aslan’s deputy at Halkbank.

Zarrab explained how, before U.S. sanctions were tightened in the middle of 2013, he had converted Iranian funds held in Halkbank into gold. Once the sanctions prohibited this gold trade, he dealt with the Iranian money in Halkbank through a falsified trade in food via Dubai.

Prosecutors said the falsified documents revealed in court showed Halkbank was the central point of a mechanism to launder Iranian money through Turkey with imaginary exports as cover.

Through insistent questioning from both the chief justice and the prosecutor, Zarrab said Halkbank had also set up a money-laundering scheme for money from India, and would have willingly done the same with Iranian energy funds held in China and Japan if these countries’ banks had not held back upon learning that the money was illegally destined for Iran.

Thursday brought good news for Atilla, as Zarrab said the banker had never asked for any bribes, and he had never paid him any.

It was a different story on Friday, however, when both the recordings and Zarrab’s testimony appeared to indicate the falsified food exports from Dubai and falsified documents were set up on Aslan’s instructions, but were monitored by Atilla; meaning he was aware of the scheme.

Indeed, while he was not in charge of the operation, the evidence appears to show Atilla was a party to it.

At first, it seems Atilla did not understand the falsified food exports and tried to obstruct the scheme, but he was shown to have later advised Zarrab on the subject. Prosecutors said that in fact, it was Atilla who found a loophole in the U.S. sanctions, discovering that the Iranians could continue to move their money through Halkbank by buying gold with their income from gas, rather than their oil sales.

Friday’s testimony indicated prosecutors are building their case around the gold trade before 2013 and falsified food exports after 2013. They are beginning to place Atilla in this context.

For now, the scenario that is slowly coming to light seems to show Atilla, not as the leader of the sanctions-busting mechanism, but as a player in it.

On the witness stand on Friday, Zarrab explained how attempts were made to conceal the falsified food trade and its connection to Iran by involving another Turkish bank, Finansbank. This raises concerns that the mechanism allegedly created within Halkbank was much more far-reaching than had been imagined, and that the dark clouds gathering over Halkbank will become even more stormy.

The trial will continue on Monday. It is not known how much longer Zarrab’s testimony will last. However, with prosecutors expected to continue with their ponderous and repetitive style of questioning, and the defence also set to cross-examine Zarrab, it seems this part of the trial will continue for some time.

In the meantime, we can expect answers to some critical questions, such as the extent to which Zarrab will reveal the secrets of the Iranian side; how he will portray his partnership with convicted Iranian billionaire businessman Babak Zanjani, now on death row in Iran; and what part the Iranian Revolutionary Guard may have played in the scheme.