May 18 2018

Further indictments “almost certain” in Zarrab case – Analyst

Further Turkish officials are highly likely to be indicted for involvement in the Iran sanction-breaking scheme led by Turkish-Iranian gold trader Reza Zarrab, according to an article by Washington-based researcher and former Turkish deputy Aykan Erdemir.

The case, dubbed “the biggest sanctions evasion case prosecuted in the United States that we are aware of” by Assistant U.S. Attorney Michael Lockard, exposed a scheme to move Iranian money past U.S. sanctions through HalkBank, one of Turkey’s largest state-owned banks.

HalkBank executive Mehmet Hakan Atilla was sentenced to 32 months in prison on Wednesday after a trial during which Zarrab, who had turned state’s witness, said the scheme had also involved high-ranking Turkish politicians including former economy minister Zafer Çağlayan.

“Although the sentencing of Atilla, pending appeals, has brought the United States of America v. Mehmet Hakan Atilla case to a close for now, it is almost certain that there are additional sealed indictments of other Turkish officials who took part in the sanctions-busting scheme,” wrote Erdemir for the Foundation for the Defense of Democracies think tank, at which he is a senior fellow.

The sentence was significantly lighter than that sought by prosecutors and recommended by the defence, and Zarrab, who is still awaiting sentencing, is expected to continue cooperating with U.S. authorities as the investigation continues.

As Atilla awaited his sentence in April, prosecutors responded to a question by presiding judge Richard Berman to state that Çağlayan, former EU minister Egemen Bağış, and Barış Güler, the son of former Interior Minister Muammer Güler had financially benefited from the scheme.

Turkish authorities say that the case has been manipulated by Fethullah Gülen, a Turkish Islamist preacher resident in the United States who the Turkish government accuses of organising the failed July 2016 coup attempt.

President Recep Tayyip Erdoğan said during an interview on Monday that the outcome of the case could “completely destroy” U.S.-Turkish relations and said Atilla’s guilty verdict was “almost equivalent to declaring the Republic of Turkey a criminal.”

With economists predicting that HalkBank could be hit with fines of around $9 billion, the largest ever imposed by the U.S. treasury on a foreign bank, business intelligece firm IHS Markit warned that they could trigger a “financial systems crisis” in Turkey.

“One thing is certain at this point,” wrote Erdermir. “The biggest sanctions-evasion case in U.S. history will continue to erode relations between Washington and its NATO ally, which only last week vowed to help Tehran again resist U.S. sanctions.”