A U.S. federal judge sentenced Turkish banker Mehmet Hakan Atilla to 32 months in prison for his part in a complex scheme to evade U.S. sanctions on Iran that added to tensions between the United States and Turkey, but said he had been only a cog in the much wider plot.
The sentence against the former deputy general manager of Turkish state-owned Halkbank was considerably lighter than the more-than-15-year term that prosecutors requested, so the court’s decision is not entirely a bad news for Atilla, who has already spent some 13 months in custody.
Although Atilla received a comparatively light sentence, it does not mean Halkbank will get off lightly too.
It could now face U.S. fines running into billions of dollars.
Much of the evidence against Atilla came from Iranian-Turkish gold trader Reza Zarrab who turned state’s witness and pleaded guilty to running the scheme to exchange gold from Turkey for Iranian oil and gas in order to get around sanctions imposed on Tehran for its nuclear programme.
Zarrab testified that Turkish President Recep Tayyip Erdoğan had given the green light for the sanctions-busting scheme and a former economy minister had taken million of dollars in bribes to cover it up. Turkey described the trial as a U.S. plot to undermine the government.
New York District Judge Richard Berman characterised Atilla as a “cog” or an unwitting actor in the scheme. In other words, the judge concluded that, contrary to prosecution claims that Atilla was the “architect” of the sanctions-busting plan, he was just following orders.
This means that some of the other actors who played bigger parts in the scheme are not yet out of the woods and could face arrest and prosecution if they set foot in the United States, or in another country acting on a U.S. warrant.
With little more than five weeks until June 24 presidential and parliamentary elections in Turkey, it would be a big surprise if the U.S. Treasury decided to fine Halkbank before election day.
The former U.S. Treasury official Jonathan Schanzer had in an earlier tweet mentioned that Halkbank and the U.S. Treasury have been in negotiations for some time, but the Turkish bank has so far refused to settle.
Analysts who specialise on the Turkish economy, among them IHS Markit economist Andy Birch, who spoke to AhvalTV, and Ahval editor Mark Bentley agree the minimum fine for Halkbank would at least around $9 billion, equal to the biggest fine ever imposed by the U.S. Treasury on a foreign bank - BNP Paribas - in the past.
For Erdoğan and those close to him, the short sentence on Atilla may seem like good news. But it is possible U.S. authorities have not yet had the final word on the case. It is also important to remember that Atilla, while not the mastermind of the plot, was still convicted of five out of the six counts against him.
Since the saga began in March 2016 with the arrest of Zarrab as he arrived on a family holiday in Miami to visit Disney World, more than two years of court revelations have painted Turkey’s strongman as a corrupt leader and worsened his standing in Western public opinion.
It is believed that Zarrab will continue to cooperate with U.S. authorities. It is also important to bear in mind that Judge Berman said Zarrab’s testimony was truthful and that there was nothing to call his credibility into question.
In other words, Berman said he found Zarrab’s accusations against several high-ranking Turkish ministers, officials, and businesspeople close to them, including officials at Halkbank and some other Turkish banks to be credible.
The United States now has a virulently anti-Iran administration that has begun re-imposing sanctions on Iran and Iranian authorities. The Halkbank-Zarrab case certainly does not make Ankara’s job any easier.