Reza Zarrab, a Turkish-Iranian gold trader whose prosecution in Manhattan has drawn sharp criticism from Turkey’s autocratic President Recep Tayyip Erdoğan, said during his first testimony before jury that he gave 45-50 million euros, $7 million and 4,5 million liras ($1.1 million) to then-Economy Minister Zafer Çağlayan between March 2012 and March 2013 as part of a deal with him.
Zarrab, appearing in a US court for the first time in months, took the witness stand at the corruption trial of a Turkish banker and quickly accused him of helping run a massive plot to evade American sanctions on Iran. Reza Zarrab has also implicated a private Turkish bank and the country’s former economy minister in a sanctions-busting scheme with Iran in a New York trial.
Moments after he was escorted into the courtroom, Zarrab was asked to identify Mehmet Hakan Atilla, a deputy chief executive officer at state-run Halkbank, which he did. He proceeded to offer a brief outline of his testimony and then, under questioning by a prosecutor, began detailing a vast money-laundering scheme designed to help Iran use oil revenues to secretly do business on the international market.
NBC News wrote that the testimony that Zarrab gives against Halkbank executive Atilla could make waves from Washington to Ankara in a sanctions-busting case that has tested US-Turkish relations and caught the interest of special prosecutor Robert Mueller’s investigators. But his first couple of hours on the stand held no blockbuster revelations, though Zarrab did say that after his arrest in March 2016 he hired attorneys to look into what prosecutors called a “prisoner exchange.”
“Cooperation was the fastest way to accept responsibility and to get out of jail,” he testified, adding that he had previously hired American lawyers to explore the possibility of a prisoner exchange between US and Turkey. Zarrab did not name the attorneys or the other prisoner. But two members of his legal team, former New York City Mayor Rudolph Giuliani and former US Attorney General Michael Mukasey, did visit Turkey on his behalf. Those efforts were unsuccessful, he said.
In a courtroom packed with Turkish media, prosecutors slowly walked him through the origins of a multibillion-dollar scheme to evade US sanctions against Iran through front companies, forged documents and bribes to Turkish officials.
Speaking through a translator, Zarrab matter-of-factly described meetings in 2011 and 2012 with Turkish and Iranian bank officials about efforts to secretly move Iranian funds. Zarrab has also said he used Aktifbank, owned by Ahmet Çalık, a close business ally of Turkish autocratic President Recep Tayyip Erdoğan, to funnel tens of millions of dollars to Iran to circumvent US sanctions. Turkish Energy Minister Berat Albayrak, Erdoğan’s son-in-law, was CEO of Aktifbank’s parent group, Çalık Holding, at the time.
After opening an account with Aktifbank, with the help of then EU Minister, Egemen Bağış, Zarrab said he began channelling cash to Iran’s central bank, starting with 5 to 10 million euros per day. Aktifbank cut him out of the loop in late 2011, Zarrab said, after which he turned to Halkbank in 2012.
“Aktifbank was working directly with the Iranians and I was eliminated,” he told jurors.
Then, he said, he reached out to then-Economy Minister Zafer Çağlayan because Halkbank’s CEO, Süleyman Aslan, turned him down on grounds of his public profile. Zarrab is married to Turkish pop star Ebru Gündeş.
“They used me as a go-between,” he told the jury. He described how he turned to friends in high places to smooth the process. One Turkish government official interceded to help him open an account at one bank, he said. Çağlayan agreed to assist — for a price. “He said, ‘I can broker this providing there is a profit share — 50-50,'” Zarrab said.
Çağlayan was given 45-50 million euros, $7 million and 4,5 million liras ($1.1 million) between March 2012 and March 2013 as part of the deal, he said, after scanning through documents he had brought to the court. Zarrab said there were other bribes paid as well, but he didn’t have the details at hand.
According to a report by Bloomberg, Zarrab, dressed in tan prison fatigues, told a New York jury that Atilla “made contributions” to a years-long plot that funneled Iranian funds through the US financial system, in violation of US sanctions. “Hakan Atilla is the most knowledgeable person about the sanction rules in the bank,” Zarrab said at the start of his testimony on Wednesday in Manhattan federal court. “He made contributions to make our scheme look like it’s complying with the American sanctions.”
Atilla, who is accused of fraud, sanctions violations and conspiracy to launder money, is one of nine people to have been charged, including senior Turkish government officials and bank executives, but only he and Zarrab have been in US custody. Zarrab, who is in the custody of the FBI, has pleaded guilty and agreed to cooperate with US prosecutors in a bid for leniency. Prosecutors say Zarrab orchestrated the scheme with aid from Halkbank officials.
Anticipating an attack on Zarrab’s character by Atilla’s defense, prosecutors were quick to introduce to the jury lies he told US investigators when he was first arrested — and how he later bribed a Manhattan federal prison guard for access to liquor and a cellphone.
He said that as part of his cooperation agreement, prosecutors will outline the help he provided has provided to them to the judge who will sentence him. After spending more than a year in a Manhattan jail, Zarrab began cooperating and pleaded guilty — leaving Atilla, the deputy general manager of Halkbank and the only other defendant in US custody, to stand trial alone.
The defense has already indicated in opening statements that it will paint Zarrab as an untrustworthy turncoat who is using Atilla as a “get out of jail free card” and is being “coddled” by federal authorities hungry for a conviction.
“Stay tuned,” defense attorney Cathy Fleming said Tuesday when asked for more details about Zarrab’s activities. “It’s going to be a bumpy ride.”
NBC News reported that the full scope of Zarrab’s testimony is still unknown, but there’s no question that officials on two continents are keenly interested in what he has to say.
The case has sparked tension between the US and Turkey and spurred Turkish autocratic President Recep Tayyip Erdogan to claim the prosecution is a plot to undermine his country’s economy. The Turkish lira fell as much as 0,2 percent to 3,97 per dollar as the testimony got underway, its weakest level on the day and lowest on record on a closing basis. The currency has depreciated 11 percent this year, the most among major markets.
