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US Prosecutor delves into Turkish State owned Halkbank’s role to evade Iran sanctions

Ilhan Tanir, Washington DC

Acting US Attorney for New York South District submitted its memorandum in opposition to defendant Mehmet Hakan Atilla’s motions to dismiss the superseding indictment or for severance from Reza Zarrab’s case.  The indictment of Deputy General Secretary of Halkbank, Mehmet Hakan Atilla who was arrested in New York at the end of March is combined with that of Reza Zarrab in early April. Since then Atilla has been jailed in New York.

In early August, Atilla asked for a trial to dismiss his case or to severe from Reza Zarrab’s. Last week, Atilla’s lawyers submitted their motion to argue his case should be dismissed or to be severed.

October 16th, Acting Attorney for SDNY, Joon H. Kim submitted a new motion and stated that Atilla is basically repeating what Reza Zarrab, Iranian-Turkish gold trader (or smuggler according to others) argued a year ago. Reza Zarrab was arrested on 19 March 2016 in the United States and charged with 4 accounts, including money laundering, in an alleged racket scheme to help Iran bypass US sanctions against the country, involving ministers of the Turkish government of then prime minister and now president of Turkey, Recep Tayyip Erdoğan. The superseding indictment in early September expanded and included Erdogan’s close ally and ex-minister of economy Mr. Zafer Caglayan, as well as former head and deputy head of Halkbank, Turkey’s largest public bank.

Zarrab’s motions for dismissal was dismissed by the federal judge Berman in September of 2016.

The motion has some important sides. Probably, for the first time, Turkish state owned Halk Bank A.S. is named. In previous indictments and motions, US Attorney Office chose to code it as “Turkish Bank 1” etc. Former attorney who closely has been following the Zarrab case told WHatti: “US Attorney’s manual rule is not to name unnecessarily persons, institutions who are not charged.” Also expert added, “money-laundering cases need high-level approval. Someone may have thought (previously) that including Halkbank would be too disruptive of TR-US relations, since it is a gov’t-owned bank.” After more than 18 months, it seems like US Attorney office saw no reason not to mention Halkbank anymore.

Another question now arises that a conviction of Halkbank would cut off Halkbank from dealing with US banks? 

SDNY stated that defendant’s argument that “the United Sates is powerless to prosecute foreign act or s who knowingly and deliberately violate economic sanctions imposed by the United States on the Islamic Republic of Iran” was previously rejected by the Court.

Prosecutor: Atilla coached Zarrab

SDNY argued “Atilla coached Zarrab as to how to prepare fraudulent transactional documents.”

Prosecutor: Atilla played a central role

Atila played a central role in the scheme, as described in the Indictment. For example, Atilla participated in mee tings at which the scheme was designed.. ( See id . ¶ 37)).. Moreover,, Atilla met with representatives from the U..SS.. Department of Treasury and deceived them about the Iranian business occurring at Halk Bank.

SDNY, then delved into the charges against Atilla: “He is charged with participating in a scheme that breached regulations that required foreign banks to make a choice – deal with the United States or deal with Iran.. Through fraudulent transactions papered over with false documents, front companies, and lies to U.S. regulators, Atilla and his co – conspirators helped his employer, Türkiye Halk Bankasi A.Ş. (“Halk Bank”), a Turkish state – owned bank, double – deal by facilitating transactions involving billions of dollars – worth of Iranian oil proceeds on behalf of the Government of Iran and related entities, while still maintaining Halk Bank’s relationship with the U.S. banks.”

“It was a scheme designed with the sole purpose of evading and avoiding U.S. sanctions laws, and facilitated through the bribery of senior Turkish government ministers . Based on a straightforward application of the pertinent statutes, executive orders, regulations, and canons of statutory interpretation, that conduct was a crime for which Atilla can be prosecuted by the United States.”

According to government memorandum, “The Indictment describes a five – year – long scheme in which the defendants conspired to violate economic sanctions imposed by the United States on Iran.. In particular,, the participants in the scheme used money – service businesses and front companies in , among other places,, Iran,, Turkey,, the UAE, and elsewhere to circumvent prohibitions against Iran’s access to the U.S. financial system and restrictions on the use of proceeds of Iranian oil and gas sales and on the supply of gold to the Government of Iran and Iranian entities and persons.. ( See Ind.. ¶ 1)).”

Corrupt officials like Caglayan

SDNY indicted Pres Erdogan’s close confidant and former key minister Zafer Caglayan in early September.

Çağlayan is accused of taking 32 million dollars in bribe and helping Zarrab to evade sanctions previously. Caglayan, in September 6th, superseding indictment, accused of receiving ”tens of millions of dollars’ worth of bribes in cash and jewelry from the proceeds of the scheme to provide services to the Government of Iran and to conceal those services from U.S.” while serving as Turkey’s Finance Minister.

On October 16th, according to memo, “leaders of Halk Bank, including Atilla,, Aslan, and Balkan,, worked with Zarrab,, corrupt Turkish officials like Caglayan , and Iranian officials to devise a scheme through which Iran could surreptitiously access its oil proceeds freely,, without scrutiny from the international community.”

“The purpose of the defendants ’ scheme was to demolish the sanctions ’ restrictions on Iranian access to oil and gas proceeds at Ha l k Bank and create an enormous,, anonymous slush fund for Iran.. Because the funds would not nominally be attributable to Iran, the Government of Iran could direct the funds anywhere across the globe free of the effect of sanctions,, including through the U..SS.. financial system..”

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