Nov 30 2017

Zarrab says he bribed Turkish minister tens of million of euros

Reza Zarrab, the Turkish-Iranian gold trader at the centre of a New York trial that could imperil U.S.-Turkey relations, took the stand at court on Wednesday to explain to the jury an elaborate scheme he orchestrated to free a “few billion euros” of Iran’s sanctioned oil and gas proceeds from Halkbank.

After 18 months in jail, Zarrab said he had decided to plead guilty to the charges of evading U.S. sanctions on Iran as, he said, “taking responsibility and cooperating was the fastest way to get out of jail”.

Zarrab said his decision to cooperate with the authorities came after his lawyers failed to conclude a “prisoner swap within legal boundaries” between Turkey and the United States. Though he did not name them, multi-millionaire Zarrab had hired former New York mayor Rudy Giuliani and former U.S. Attorney General Michael Mukasey to work on his behalf.

Zarrab told the jury he was pleading guilty to seven charges; all six charges in the indictment and to bribing a prison officer to use his mobile phone and smuggle alcohol.

Zarrab said the U.S. government had not promised him a shorter sentence in return for his cooperation. He said that he had three obligations according to the plea deal; to speak the truth, to cooperate with the government and not commit further crimes. Donned in prison garb, Zarrab denied rumours he was staying in a hotel, but said he was in FBI custody.

Zarrab identified the defendant Mehmet Hakan Atilla as head of the international relations department of Halkbank and testified that Atilla was the mastermind behind the complicated scheme due to his expertise in sanctions regulations.

Appearing calm, but animated, Zarrab answered every question directly, even bluntly. In around 2010, he said he had figured out a way to free U.S. sanctioned Iranian money resting in Turkey’s Aktif Bank. Aktif Bank at first rejected his bid to open a special account to conduct business with Iranian entities, so Zarrab called Egemen Bağış, Turkey’s former minister of EU affairs. Zarrab said Bağış then convinced Aktif Bank to do business with him.

Working with Aktif Bank, Zarrab said he had freed five to ten million euros a day for his Iranian clients. Zarrab testified that Aktif Bank, part of Çalık Holding, later decided to cut him out of the deal and do business with Iran directly. At the time, the CEO of Çalık Holding was none other than Berat Albayrak, President Recep Tayyip Erdoğan's son-in-law and current energy minister.

Once his business with Aktif Bank dried up, Iranian-born Zarrab said he started searching for similar business opportunities and arranged meetings with the former Central Bank director of Iran, Mahmoud Bahmani to offer the bank a better price point for the delivery of cash. After a few months working for Iran’s central bank, Zarrab said, he started doing business with the sanctioned Mellat Bank of Iran.

Halkbank too initially did not want to do business with Zarrab because, married to Turkish pop star Ebru Gündeş, he was too high profile. That is when he said he decided to let Turkey’s then Economy Minister Zafer Çağlayan know of his troubles. Çağlayan called him back a few days later, Zarrab said, and asked for half the profits in exchange for helping him out. Zarrab told the court that he paid Çağlayan around 45-50 million euros, $7 million and almost 2.5 million Turkish lira.

Later Zarrab was asked to draw diagrams to explain the scheme that enabled him to launder what he referred to as “a few billion euros” of sanctioned Iranian funds. Zarrab enthusiastically drew a complicated chart to explain how Halkbank officials facilitated the transfer of Iranian money to be laundered. When the judge asked, he said it took more than 10 transactions to hide the origins of the money.