Ilhan Tanir
Dec 06 2017

Defence team begins Zarrab questioning in sanctions trial

U.S. defence lawyers for a Turkish banker charged with laundering millions of dollars to evade sanctions on Iran, sought to discredit prosecution star witness Reza Zarrab on the fifth day of his testimony in a New York trial that has shaken relations between the United State and its NATO ally Turkey.

Iranian-Turkish gold trader Zarrab has pleaded guilty to running a complex scheme to circumvent U.S. sanctions imposed on Iran due to its nuclear programme. In return for what is termed “substantial assistance” - providing evidence to investigate and prosecute others in the plot – Zarrab hopes for a reduction in the decades he would otherwise spend in jail if tried and found guilty. 

Iranian-born Zarrab, who also has Turkish citizenship, has already testified that he bribed Turkish officials and worked with the accused, Mehmet Hakan Atilla, to launder funds for the complex scheme involving shipments of gold in return for embargoed Iranian oil and gas. Atilla, who worked as deputy general manager of Turkish state-owned Halkbank, denies the charges.

Turkish President Recep Tayyip Erdoğan has called the trial part of a plot to destabilise Turkey. The two countries are already at odds over the status of Jerusalem, U.S. support for Syrian Kurdish forces and Washington’s refusal to hand over Turkish preacher Fethullah Gülen, the man Ankara accuses of masterminding last year’s failed coup.

Zarrab, who appeared nervous as the cross-examination began, acknowledged that he had agreed to give U.S. officials substantial assistance as a part of his plea deal.

Atilla's attorney, Cathy Ann Fleming, said Zarrab had met Atilla less than a handful of times. “Two handfuls,” Zarrab said. The 34-year-old millionaire Zarrab admitted his relationship with Atilla was not very warm and said that during their time working together he did not offer, nor did the banker accept any bribes.

Fleming said Zarrab had been caught smoking "synthetic marijuana" while in jail. "I do not know if this is a crime or not," Zarrab said. "It is against prison regulations."

Zarrab also admitted to paying a $45,000 bribe to a prison guard in exchange for the use of his mobile phone and for the officer to smuggle alcohol into the prison. Zarrab confirmed that his Turkish lawyer had paid the bribe to the officer.

Zarrab said he video conferenced his pop start wife Ebru Gündeş, his daughter, his elder sister, and his uncle on the correctional officer's phone, and that the guard also smuggled in DayQuil, a cold and flu medicine that can also be used for recreational purposes.

The gold trader Zarrab said he earned between $100 million to $150 million from the Iranian money laundering operations, but admitted during questioning by the defence team that he had falsely declared his income in Turkey so as to pay less tax.

He also admitted to hiring prostitutes in Turkey in 2013. With this admission, Zarrab, under oath, confirmed one of a series of recordings released online from that time in which he is heard offering sex workers to his guests.

As well as trying to discredit Zarrab as an honest witness, Atilla's lawyers portrayed his job at Halkbank as a relatively insignificant position. The defence team emphasised that Atilla and Zarrab did not talk much on the phone, not as much as the gold trader spoke with Halkbank officials Levent Balkan and Hakan Aydoğdu. The defence team attempted to prove that both Balkan and Aydoğdu had more critical functions in the scheme.

Zarrab denied he was a partner with billionaire Iranian businessman Babak Zanjani, who is seen by some as the head of the international sanctions-busting scheme. Zanjani was arrested in Iran in late 2013 and later sentenced to death on charges of “spreading corruption of earth” for withholding billions of dollars of the proceeds from the illegal trade from Iranian authorities. He is currently on death row in Tehran’s notorious Evin prison.

Zarrab said Zanjani was only one of the Iranians he was doing business with and denied that any of Zanjani’s money was invested in his bank accounts in Turkey. Zarrab acknowledged that he helped Zanjani transfer and sell 1.5 tonnes of gold from Ghana, but said their relationship was limited to only a few business dealings.

Arrested on arrival for a family holiday to Disney World in March 2016, Zarrab admitted that his first statement after his arrest in Miami was not entirely truthful. He said $102,000 in cash he brought with him was spending money.

He said he first held meetings with U.S. officials to discuss cooperating with the prosecution in August, 2016, but no deal was reached. Zarrab said he had hired former New York mayor Rudolph Giuliani and former U.S. Attorney General Michael Mukasey to try negotiate a political deal for his release "within legal boundaries", but the attempt had failed.

Negotiations for a plea bargain resumed in August of this year and he signed an agreement with the prosecution at the end of October. Zarrab said that part of the plea agreement with the prosecutor's office was that he should not lie.

During a light-hearted moment in court, Zarrab said that he was removed from the prison after the plea deal was agreed, but the prison conditions had not been "too bad".