Ilhan Tanir
Nov 01 2017

Zarrab could strike deal with U.S. prosecutors and reveal secrets

With less than a month before his trial on charges of running an oil-for-gold scheme to bypass sanctions on Iran, Reza Zarrab may have struck a plea deal with U.S. courts to reveal details of a plot that could implicate senior figures in the Turkish government.

Zarrab, a gold trader with both Turkish and Iranian citizenship, is accused of using a network of companies to ship gold from Turkey to Iran in return for oil and then laundering the profits with the help of Turkish banks, all with the connivance of Turkish and Iranian officials.

Court papers filed on Monday on behalf of Zarrab's co-defendant, Turkish banker Hakan Atilla, said Zarrab "has essentially not participated in the case" since Sept. 6. The papers filed by Atilla's lawyers Victor Rocco and Cathy Fleming challenge the admissibility of government evidence, but also said that as "all of the other defendants reside outside the U.S., it appears likely that Atilla will be the only defendant appearing at trial."

Of the nine defendants in the case, only Zarrab and Atilla are in U.S. custody and the rest are all outside the United States.

Atilla's lawyers said in the 27 pages of court papers that Zarrab had not filed a motion to dismiss the fourth and final indictment that includes Turkish former economy minister Zafer Çağlayan, who is accused of taking millions of dollars in bribes to conceal the sanctions-busting scheme. Zarrab "did not file a motion to dismiss indictment", the papers said.

Zarrab’s failure to file a motion to dismiss could mean he has struck a plea bargain deal to reduce a possible 75-year sentence. Zarrab's lawyers also did not submit proposed questions to be asked of prospective jurors.

"One would not expect a lawyer going to trial to give up these chances to shape the way his client's case gets presented to the jury," Daniel C. Richman, a law professor at Columbia Law School, told the New York Times.

If Zarrab pleads guilty, he will testify before a Grand Jury in a closed hearing that could lead to new indictments. In a plea bargain, the defendant agrees to plead guilty to a less serious charge in exchange for cooperating with the authorities. In this case, Zarrab might agree to a smaller sentence in exchange for testifying against his collaborators. 

If Zarrab testifies against Atilla, who is pleading "not guilty", it might force Atilla to pursue a plea deal of his own.

Revelations of complicity by senior Turkish officials could prove embarrassing for Turkish President Recep Tayyip Erdoğan who has ramped up his rhetoric against the United States in recent weeks. He said in a speech U.S. prosecutors were trying to "elicit a confession" from Zarrab and convince him to become an "informant".

It was too early to say with certainty though that Zarrab had made a deal, said financial crime consultant Kenneth Rijock, who has closely followed the alleged scam since it began to emerge in late 2013.

Since Zarrab had not filed any notice to plead guilty, Atilla's lawyers were merely speculating when they said their client would be the sole defendant, he said.

“Zarrab has not submitted any notice that he intends to change his plea to guilty or to cooperate with the U.S. Attorney's Office ... though Zarrab faces a lengthy sentence if convicted, and he may be considering changing his plea," Rijock told Ahval.  

"That would be the smart move on his part because the evidence appears sufficient to obtain a conviction, and any appeal that his lawyers file later statistically has a small chance of success. Jury verdicts are sustained on appeal unless there are serious errors of law at trial," he said.

"This may just be a way for Atilla's attorney to focus attention on his client," Rijock said, adding that if Zarrab does strike a deal and pleads guilty, it may not become apparent until just before the trial commences on Nov. 27.

Zarrab and Attila are accused of conspiring to launder hundreds of millions of dollars of Iranian oil money using Turkish state bank, Halkbank; and possibly some other Turkish private banks, evading U.S. sanctions on Iran, and carrying out fraudulent transactions using U.S. banks. 

Many other Turkish citizens, including ministers, may be implicated in the case. The five-page paper published by the prosecutor's office last week states that the Sept. 6 "extended indictment" includes others so far not publicly named by the prosecution.