Ilhan Tanir
Dec 05 2017

Zarrab says Iran sanctions scheme operated till 2016 arrest

Reza Zarrab, the star witness in an ongoing U.S. sanctions-busting trial, testified to a New York court that when corruption charges were dropped against him in Turkey and he was freed from jail in early 2014, he carried on where he had left off with his complex scheme to bypass the economic embargo on Iran until his arrest in Miami in March 2016.

Lawyers for the accused, Turkish banker Mehmet Hakan Atilla, may begin to cross-examine Zarrab as soon as Tuesday. Meanwhile they filed as evidence to the court a recording of a telephone conversation Zarrab had while in U.S. custody in which he said that in the United States one had to lie to get a reduced sentence.

Prosecutor Sidhardha Kamaraju appeared to be going after Halkbank, where Atilla was deputy general manager. Both Kamaraju's questions about Halkbank's co-operation with Zarrab and some bank documents the prosecution submitted as evidence seemed aimed at proving that the institution, rather than individuals, was instrumental in the plot to evade sanctions imposed on Iran over its nuclear programme.

It is the first time it has become known that Zarrab continued his activities after the corruption scandal that broke in Turkey on December 17th, 2013. Turkish police detained dozens of people, including Zarrab and close relatives of government ministers and others connected with the ruling party, on suspicion of bribery, corruption and evading international sanctions on Iran. After initially being wrong-footed, now-President Recep Tayyip Erdoğan’s government secured the removal and arrest of the prosecutors and police involved in the case and his allies were freed.

However, Halkbank General Manager Süleyman Aslan , Levent Balkan, the manager of its international banking division, and senior manager Hakan Aydoğan, were all fired from their positions at the time of the corruption scandal. Ali Fuat Taşkesenlioğlu replaced Aslan as the new general manager of the publicly owned bank.

But, the prosecution told the jury, while these top officials were fired, Atilla, who was not accused in the December 17th indictment, kept his position in the bank. The prosecutors emphasised Atilla's role in the alleged crime before and after 2013. In other words, they said, Atilla was involved in the Iranian trade throughout, both before and after the 2013 arrests.

Zarrab told the jury in response to one of the prosecutor's questions that he started his gold trade with Iran at the beginning of 2012 and continued until he was arrested on arrival in Miami in 2016.

Iranian-born Zarrab also testified that Taşkesenlioğlu did not ask for any bribes and nor did Zarrab offer any. Zarrab, who also has Turkish citizenship, said that it was Atilla who suggested he find new Iranian companies to trade gold and fictitious goods in the first months of 2014. That would indicate that Halkbank as an institution was instrumental in Zarrab's continued Iranian trade rather than individuals. As the new Halkbank general manager did not accept bribes, it was not clear what happened to the share of the money that was formerly paid to Aslan.