A scheme allegedly used by Iran to evade sanctions through a state-owned bank in Turkey has been detailed in court in New York by a Turkish-Iranian businessman who claims he bribed a former Turkish economy minister €50m as part of the billion-dollar operation.
In a case that has strained relations between Turkey and the US, Reza Zarrab, a gold trader, described a sprawling money-laundering network that allowed Iran access to international markets in violation of sanctions imposed on it over
Zarrab had faced charges including bank fraud and money laundering but court papers revealed on Tuesday that last month he struck a deal with prosecutors to testify against his former co-defendant in the case, Mehmet Hakan Atilla, a former deputy chief of the Turkish state-owned bank Halkbank.
The Turkish government had repeatedly raised Zarrab’s case with the US, demanding his release. In recent weeks senior Turkish officials have condemned the trial as a plot engineered by Fethullah Gülen, a Pennsylvania-based cleric accused by the government of orchestrating an attempted coup last year.
In its first reaction to Zarrab’s testimony, Bekir Bozdağ, the Turkish deputy prime minister, described the trial as “theatre” and a “plot against Turkey and President Recep Tayyip Erdoğan”, adding that justice cannot be expected.
Erdoğan was quoted by CNN Turk on Thursday as saying Turkey did not violate US sanctions against Iran and “did the right thing”.
In Turkey, the trial has been dismissed by senior officials and pro-government media as a conspiracy based on evidence gathered illegally by members of Gülen’s movement in the police and judiciary.
“Why should I be concerned?” said the Turkish foreign minister, Mevlüt Çavuşoğlu, at a recent press briefing for foreign journalists when asked about the possibility that the trial would implicate Ankara in sanctions violations. “If something is fabricated we also have something to say. This is an indictment prepared by [Gülen’s] people … it means that the case is very much politically motivated.”
But despite the public dismissals, the case is likely to prove embarrassing for Erdoğan’s government if prosecutors provide compelling evidence linking Zarrab to other senior officials. It could also have a damaging effect on the Turkish economy if Zarrab’s revelations hurt the banking system, amid a reduction in the value of the Turkish lira.
Relations have been greatly strained between the US and Turkey, the two largest armies in Nato, over the past few years, beginning with the former’s reluctance to intervene forcefully against Bashar al-Assad early in the Syrian civil war. Recent US support for Kurdish militias fighting Islamic State in Syria has further angered Ankara, which considers them affiliates of the Kurdish insurgency in Turkey.
Visa services for nationals of both countries have been suspended in recent weeksover the arrest of US consulate personnel in Turkey who were accused of having links to the Gülen network.
Zarrab claimed that he bribed the former Turkish economy minister Zafer Çağlayan, who resigned in late 2013 over corruption claims. The Erdoğan government alleges that the 2013 investigation was orchestrated by the Gülen movement, and it marked the total break in ties between that organisation and the ruling Justice and Development (AK) party.
On Thursday the pro-government newspaper Daily Sabah published a rebuttalheadlined: “Fabricated evidence, a pro-[Gülen] judge, a clear plot against Turkey: all about the Zarrab case.”
It accused the judge overseeing the case, as well as the former prosecutor who indicted Zarrab, of having links to the Gülen movement.
Atilla has pleaded not guilty.