Nov 17 2017

Judge denies Turkish banker's motions amid Zarrab plea deal speculations

Ahval reporting from the courtroom of the Southern District of New York:

Federal judge Richard Berman denied Turkish banker Hakan Atilla's motion to dismiss him from the case of the U.S. v Zarrab et al. Atilla's lawyers had filed the proposal to the court in October, claiming that the indictment failed to connect Atilla to the conspiracies committed inside the U.S.

The judge also denied Atilla's motion to dismiss Turkish recordings that the prosecution was planning to use during the trial. However, Judge Berman allowed the use of the tapes only on the condition that they are authenticated.

Even though it is not yet clear what recordings the prosecution is planning to use, some speculate that the evidence might be related to a 2013 corruption probe in Turkey. In 2013, a criminal investigation encompassing many governing Justice and Development Party (AKP) members, including some cabinet ministers, was started. The inquiry, focused on the so-called ‘oil for gold’ scheme in which sanctions on Iran were undermined through secret shipments of gold into the country, accused many key AKP figures of bribery, fraud and money laundering. The 2013 investigation was ultimately shut down by President Recep Tayyip Erdogan, who claimed that it was a "judicial coup attempt" against his government.

Despite initial expectations that he would appear before the court, Reza Zarrab once again failed to show up for the hearing, intensifying speculation that he might have struck a plea deal with the prosecution. In fact, before the day ended, American news network NBC had reported based on two sources that Reza Zarrab had already began cooperating with U.S. prosecutors.

Atilla's attorney Victor Rocco once again reminded the court of Zarrab's absence and asked whether he would appear for the jury trials. Judge Berman, on record, said that he was not informed on the subject. “The one perk that comes with being a judge is you don’t have to answer questions as witnesses and lawyers do,” Berman said.

Atilla’s lawyers had earlier claimed that co-defendant Zarrab might not appear before the jury. He has not attended any of the court hearings since September 6th, when a federal grand jury accepted a six-count superseding indictment accusing Zarrab, Atilla, former Turkish Economy Minister Zafer Cağlayan, former General Manager and chief executive officer of Halkbank Süleyman Aslan and four others of using money service businesses and front companies in Iran, Turkey and the United Arab Emirates to violate and evade U.S. sanctions against Iran. Each defendant is also charged with conspiracy to defraud the U.S.

Zarrab, who had entered a plea of not guilty earlier in the trial, did not appear to fight the latest superseded indictment in September. Last month Atilla’s lawyers remarked that it seemed “likely that Atilla will be the only defendant appearing at trial.

On Wednesday, Turkish media reported that Turkish Foreign Ministry had contacted the U.S. State Department to inquire into Zarrab’s whereabouts. According to a pro-government Turkish newspaper, Turkish officials also urged the U.S. to notify the Turkish government before relocating Turkish prisoners.

It was also reported in the media that President Erdogan had raised Zarrab's case with then-Vice President Joe Biden during bilateral meetings. Later, Zarrab retained Rudy Giuliani, a Trump campaign surrogate, as part of his defence team. The New York Times reported that Giuliani met with the Turkish president in February to strike an agreement for the release of Zarrab.

Atilla, who is seemingly the only defendant set to face the jury on November 27, 2017, is accused of knowingly facilitating, scheming, conspiring and participating in the design of the series of fraudulent transactions allegedly intended to deceive U.S. sanctions. The charges are based on a series of financial transactions involving Halkbank and some companies owned by Zarrab. The U.S. government alleges that these transactions, involving sales of gold and/or food between Iranian and Turkish entities disguised as legitimate business transactions, were a scheme to transfer Iranian oil sales proceeds back to Iran, undermining U.S. sanctions.