Nov 01 2017

Turkish finance minister vouches for banks amid Iran sanctions probe

Turkey’s finance minister has personally vouched for the country’s banks as concern mounted that they could face U.S. fines for circumventing sanctions on Iran.

U.S. authorities are holding Hakan Atilla, a deputy chief executive of Turkey’s state-run Halkbank, on charges of conspiring with Iranian-born businessman Reza Zarrab to help funnel cash to Iran in gold, making fictitious shipping payments, and other transactions in return for Iranian oil.

Investors in Turkish lenders are concerned about possible wider complicity. Banking shares fell 3 percent on Monday after a Turkish media report, later deleted from the internet, said they could face billions of dollars in penalties.

“We discussed with our American counterparts in the past years about the sanctions against Iran, and all our banks, including Halkbank, conformed to U.S. requirements,” Finance Minister Naci Ağbal said in an interview with the Financial Times.

President Recep Tayyip Erdoğan has publicly intervened in the case against Zarrab on several occasions, labelling the U.S. investigation a conspiracy against Turkey. The probe into sanctions-busting has worsened relations between the two NATO allies.

Agbal, the FT said, laid the blame for the investigation on the influence of Pennsylvania-based cleric Fethullah Gülen, who Turkey accuses of masterminding a failed military coup in July last year. 

Zarrab, a gold trader with both Turkish and Iranian citizenship, is suspected 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 complicity of Turkish and Iranian officials. 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.

Zarrab’s failure to file a motion to dismiss the case against him in New York could mean he has struck a plea bargain deal to reduce a possible 75-year sentence. Court papers filed on Monday on behalf of co-defendant Atilla said Zarrab "has essentially not participated in the case" since Sept. 6.

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