Halkbank’s Deputy CEO Arrested For Conspiring To Evade US Sanctions Against Iran And Other Offenses

Halkbank's Deputy CEO Mehmet Hakan Atilla.

Mehmet Hakan Atilla, Deputy CEO of state largest lender Halkbank, was arrested by the agents of Federal Information Bureau (FBI) at John F. Kennedy Airport in New York City on March 27. Atilla was accused of conspiring with controversial Iranian-Turkish businessman Reza Zarrab “to evade US sanctions against Iran and 0ther offenses.”

According to a written press statement released by Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Division of the Federal Bureau of Investigation (“FBI”), on Tuesday, “the unsealing of a Complaint charging Mehmet Hakan Atilla with conspiring with others, including Reza Zarrab, (a.k.a Rıza Sarraf) to use the US financial system to conduct transactions on behalf of the Government of Iran and other Iranian entities, which were barred by United States sanctions, and to defraud US financial institutions by concealing the true nature of these transactions. Atilla was arrested on March 27, 2017, and will be presented later today in Manhattan federal court before United States Magistrate Judge James C. Francis IV.”

Kim also stated that: “As alleged, Mehmet Hakan Atilla, a Turkish banker, participated in a years-long scheme to violate American sanctions laws by helping Reza Zarrab, a major gold trader, use US financial institutions to engage in prohibited financial transactions that illegally funneled millions of dollars to Iran. As alleged in the criminal complaint unsealed today, Atilla worked with Zarrab to create and use fraudulent documents to try to disguise prohibited Iranian financial transactions as food that would qualify under the humanitarian exception to the sanctions regime. United States sanctions are not mere requests or suggestions; they are the law. And those who use the American financial system to violate the sanctions laws, as Atilla is alleged to have done, will be investigated and prosecuted aggressively. I thank the FBI and the career prosecutors in my Office for their tireless work and dedication in this and other important investigations of alleged sanctions violators.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. has also said: “Iran continues to illustrate it will use whatever means necessary to evade sanctions and violate US law. Our work in this case shows the unscrupulous behavior by exposing how the men charged allegedly moved massive amounts of money through US banks disguised as humanitarian efforts to feed people in need. In this instance, they allegedly utilized a Turkish national and a financial institution that knowingly shielded the true nature of the transactions. The FBI and the US Intelligence Community have dedicated investigators and analysts who won’t stop weeding out every action Iran takes to continue its alleged illegal activity.”

According to the allegations contained in the Complaint, “beginning in or about 1979, the President has repeatedly found that the situation in Iran constitutes an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States and declared a national emergency to deal with the threat. Pursuant to these presidential declarations, the United States has instituted a host of economic sanctions against Iran and Iranian entities pursuant to the International Emergency Economic Powers Act (the “IEEPA”). This sanctions regime prohibits, among other things, financial transactions involving the United States or United States persons that were intended for the Government or Iran or Iranian entities.

“Specifically, Atilla, Zarrab, and others protected and hid Zarrab’s ability to provide access to international financial networks, including U.S. financial institutions, to the Government of Iran, Iranian entities, and entities identified by the Department of the Treasury Office of Foreign Assets Control as Specially Designated Nationals (“SDNs“). They did so by, among other things, using the Turkish bank (Halkbank) at which Atilla acted as Deputy General Manager of International Banking to engage in transactions that violated US sanctions against Iran. In particular, they took steps to protect and hide Zarrab’s ability to supply currency and gold to the Government of Iran, Iranian entities, and SDNs using Turkish Bank-1 without subjecting Turkish Bank-1 to US sanctions. As described in more detail in the Complaint, Atilla, Zarrab, and others conspired to create and use false and fraudulent documents to disguise prohibited transactions for Iran and make those transactions falsely appear as transactions involving food and thus falling within humanitarian exceptions to the sanctions regime.”

According to written statement, “Mehmet Hakan Atilla, 47, is a resident and citizen of Turkey. Atilla is charged with conspiracies to violate the IEEPA and to commit bank fraud. The conspiracy to violate the IEEPA carries a maximum term of 20 years in prison. The bank fraud conspiracy count carries a maximum term of 30 years in prison. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Acting United States Attorney for the Southern District of New York, Kim, has also “praised the outstanding investigative work of the FBI and its New York Field Office, Counterintelligence Division, and the Department of Justice, National Security Division, Counterintelligence and Export Control Section. He also thanked U.S. Customs and Border Patrol for their assistance in the arrest, and the Justice Department’s Office of International Affairs for its assistance on this case.

The prosecution of this case is being handled by the Office’s Terrorism and International Narcotics Unit. Assistant United States Attorneys Michael D. Lockard, Sidhardha Kamaraju, and David W. Denton, Jr., and Special Assistant United States Attorney Dean Sovolos, are in charge of the prosecution, with assistance from Trial Attorney David Recker of the Counterintelligence and Export Control Section.”

Atilla and Halbank’s other top officials had allegedly helped Reza Zarrab to transfer Iran’s controversial funds by pretending to be doing a trade in goods and gold via Dubai during Iran under international economic and financial sanctions. Zarrab was also a suspect in Turkey’s largest corruption scandal in December 2013. However, he was saved by then-Prime Minister Recep Tayyip Erdoğan who hushed-up the graft probe by sacking and then arresting numbers of judges, prosecutors and police chiefs who had been investigating the graft.

Atilla allegedly helped Zarrab to doctor fake invoices showing shipments of 150.000 tons of wheat and sugar in freighters that had only 5000 DWT capacity.

Zarrab, 33, who was born in Iran and moved to Turkey as an infant, has dual citizenship. He was arrested in March 2016 as he arrived on a trip to Miami, and was sent to New York to face charges. Prosecutors, arguing against bail, said Zarrab had used his considerable wealth and influence to be released from a prison in Turkey after he was detained there in 2013 as part of a corruption investigation of businessmen with close ties to Erdoğan, then Turkey’s prime minister.

Erdoğan has publicly criticized Zarrab’s prosecution in the US. According to news reports, Erdoğan said last fall that he had raised Zarrab’s case with then-US Vice President Joseph R. Biden, during talks at the United Nations, and Erdoğan also said there were “malicious” intentions in the prosecution, according to the reports.

Reza Zarrab’s trial in the US has drawn much attention in Turkey as Zarrab was briefly detained in 2013 along with others from the inner circle of the ruling Justice and Development Party (AKP) government and President Erdoğan for having paid Cabinet-level officials and bank officers bribes to facilitate transactions benefiting Iran.

After then-Prime Minister and current President Erdoğan cast the case as a coup attempt to overthrow his government orchestrated by his political enemies, several prosecutors were removed from the case, police were reassigned and the investigation against Zarrab was dropped.

However, the US has said it has evidence that Zarrab paid millions of dollars in bribes to Turkish government officials and top executives at Halkbank, which helped Zarrab process the transactions.

Zarrab, owner and operator of Royal Holdings A.Ş., is accused of using his multibillion-dollar network of companies in Turkey and the United Arab Emirates to induce US banks to launder hundreds of millions of dollars in transactions that violated international sanctions against Iran. He was arrested in Miami in March 2016 after arriving in the US for a family trip and remains in detention.

Zarrab has been charged in the US with facilitating millions of dollars in illicit transactions on behalf of Iran and other sanctioned entities through the use of front companies and false documentation. Prosecutors have said he “allegedly tricked numerous US financial institutions into processing barred transactions.”

Zarrab has also been charged with conspiracies to commit money laundering and bank fraud. He has pleaded not guilty to the charges, and was ordered detained without bond.

March 28, 2017

 

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