Reza Zarrab potential witness as Turkey’s Erdoğan cited in US sanctions-busting case

Reza Zarrab, a Turkish-Iranian gold trader who was arrested in Miami in March 2016 on charges of evading US sanctions on Iran, will not go on trial this week, a US judge in New York said Monday. It was reported that Zarrab is a potential witness in a US sanctions-busting case against former Turkish state banking executive Mehmet Hakan Atilla, according to a court document.

According to Reuters, Judge Richard M. Berman, the senior federal judge of the US District Court for the Southern District of New York, told potential jurors on Monday morning that Mehmet Hakan Atilla (47), an executive of Turkish state-owned Halkbank, will be the only person on trial.

According to a report by online news portal Ahval, Berman has also distributed a list of potential witnesses and other prominent names to be cited in the case, including Turkish autocratic President Recep Tayyip Erdoğan and his son Bilal Erdoğan. The document was named “Criminal Case Voir Dire”, or a preliminary examination of a witness or the jury pool by a judge or counsel.

Other well-known names included former EU minister Egemen Bağış, former deputy prime minister Ali Babacan, current Deputy Prime Minister Mehmet Şimşek and other Turkish government and banking officials. The only defendant cited in the court case is Mehmet Hakan Atilla, former executive of Turkish Halkbank.

Zarrab, 34, stopped appearing in court in the two months leading up to his scheduled trial, prompting Turkey’s prime minister to suggest he has reached a plea deal with US authorities.

Zarrab and eight other people, including Turkey’s former economy minister and three Halkbank executives, have been charged with engaging in transactions worth hundreds of millions of dollars for Iran’s government and Iranian entities from 2010 to 2015 in a scheme to evade US sanctions.

Benjamin Brafman, a lawyer for Zarrab, declined to comment on Zarrab’s absence at the trial. A spokesman for the prosecutors did not immediately respond to a request for comment.

Jury selection finally began on Monday under Berman’s supervision. The court case is entitled “United States v. Mehmet Hakan Atilla”, and according to pool reporters, Judge Berman has confirmed to jurors that Halkbank executive Atilla will be the only defendant in the case.

The trial will begin as soon as a jury is chosen and is expected to last three to four weeks. The case is acutely sensitive in Turkey in part because the prosecutors say Turkey’s former economy minister, Zafer Çağlayan, was involved in the alleged conspiracy. Çağlayan has denied the charges.

According to a tweet by New York Times reporter Benjamin Weiser, who is closely following the trial in Manhattan, Zarrab could be a witness in the case. “Here is Reza Zarrab’s name as it appears on a list given to prospective jurors in the Atilla trial of ‘potential witnesses in this case and names that may come up during trial.’ This means, of course, that #Zarrab could be a witness or merely that his name will be mentioned,” he tweeted on Monday.

Reza Zarrab, thought to be the most important defendant until very recently, was only cited as “co-conspirator.” Zarrab’s name appearing on the list not as a defendant makes it almost certain that he has agreed a deal with prosecutors and would be available, likely, as a potential witness in the case.

The release of the Criminal Case Voir Dire is unlikely to do any favours for Turkey’s banking sector, with three Turkish banks – the state-owned Halkbank and Ziraat Bank and the privately owned AktifBank which is known to be close to the Erdoğan family – being listed alongside a catalogue of Halkbank present and former employees.

Douglas Sloan, Deutsche Bank’s U.S head of anti-financial crime, Citibank’s Robert Peri, who is the bank’s director of compliance, intelligence and investigations, were named in the document as potential witnesses.

HSBC, JPMorgan Chase & Co., Standard Chartered Bank, UBS AG and Wells Fargo, may also be subjects in the case, according to the document, while one of the places the document lists is Trump Towers in Istanbul.

Meanwhile the Turkish government and President Erdoğan have said the case has been fabricated for political motives. This has exacerbated tensions between Ankara and Washington, NATO allies. Investor sentiment toward Turkey has cooled, and traders said the situation was a factor in the lira’s fall to record lows.

Prosecutors said in a court filing four weeks ago that Zarrab once told another defendant he had spoken with Erdoğan directly about the alleged scheme.

With the trial of  Zarrab due to in New York this week, Ankara on Monday called on Washington to drop the case involving Zarrab, the state-run Anadolu news agency reported. “I am asking those judging the case in the US, do you have valid evidence against Rıza Sarraf [Reza Zarrab] or not,” Turkish Deputy Prime Minister Bekir Bozdağ said in an interview with TV 24.

“In this case actually, there is no valid evidence in accordance with US law,” he said, adding: “There is no valid evidence because evidence against the law cannot be used.” According to Bozdağ, the case lacks legal grounds and must be dropped or terminated.

Turkish Foreign Minister Mevlüt Çavuşoğlu has said he sees in this case the hand of US-based Turkish Islamic scholar Fethullah Gülen. Erdoğan accuses Gülen of masterminding last year’s failed military coup in Turkey and also of driving an earlier legal case involving Zarrab. Gülen denies both accusations.

Acting US Attorney in Manhattan Joon Kim last week called the claim that Gülen was behind the US case “ridiculous.”

Zarrab, together with alleged co-conspirators, has been charged with handling hundreds of millions of dollars for Iran’s government and Iranian entities from 2010 to 2015, in a scheme to avoid US sanctions on Iran. He has pleaded not guilty and is due to go on trial in New York on Nov. 27.

Turkish authorities opened an investigation into the US prosecutors who brought charges against Zarrab, state media said on Saturday, citing the allegations that it was based on fabricated documents.

However’ the United States has every right to try executives of Turkey’s state-run Halkbank for breaking sanctions on Iran, a former U.S. prosecutor told Habertürk newspaper on Monday. The Turkish government is wrong to depict the trial as political because many banks have been fined for illegally using the US banking system for sanctions-busting in the past, Danial Richman told in an interview. If cash had been sent to Iran by truck then prosecutors in the United States would not have opened a case on such charges, he said.

Prosecutors may implicate other officials in the case, including politicians in Turkey, and new trials may be started, Richman said. They would need to apply to the State Department and the Treasury before proceeding, he said. Zarrab may have turned state’s witness and could enter the U.S. witness protection programme should his life be in danger, Richman said. Zarrab may also be considering entering a guilty plea, he said.

Under a previous Turkish investigation that became public in 2013, Turkish prosecutors accused Zarrab and high-ranking Turkish officials of involvement in facilitating Iranian money transfers via gold smuggling, leaked documents at the time showed.

President Erdoğan, then prime minister, cast that investigation as a coup attempt orchestrated by his political enemies. Several Turkish prosecutors were removed from the case, police investigators were reassigned, and the investigation was later dropped. (SCF with turkishminute.com)

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