US names Turkish ministers, banks as beneficiaries of sanctions-busting scheme

The US District Attorney’s Office prosecuting the sanctions violation case of Turkish banker Mehmet Hakan Atilla in response to a judge’s question said that four former Turkish Cabinet ministers had financially benefited from the scheme to contravene sanctions on Iran, Turkish news site Gazete Duvar reported on Friday.

Atilla was found guilty on five of the six charges he faced in a trial in the Southern District of New York and is awaiting sentencing for his part in a scheme to evade sanctions on Iran using a mechanism to move Iranian money through the Turkish state-owned Halkbank.

The trial revealed allegations of involvement in the scheme by top Turkish officials including President Recep Tayyip Erdoğan and former economy minister Zafer Çağlayan, as Reza Zarrab, a central player in the scheme turned state witness, gave his testimony.

As Atilla awaits his sentencing on May 7, Judge Richard Berman posed questions to the prosecution about who reaped the financial rewards of the scheme.

The prosecution’s response was submitted to the court on Friday, naming Halkbank, Reza Zarrab, Çağlayan, former EU Minister Egemen Bağış and Barış Güler, the son of former Interior Minister Muammer Güler, as well as several Iranian individuals.

Zarrab told the court during his testimony that he had paid bribes worth “tens of millions of euros” to Çağlayan; he also said Bağış had intervened to help him open an account for use in the scheme.

Meanwhile, lawyers for the Turkish banker convicted of helping Iran evade US sanctions told Judge Berman on Friday it would be unfair to subject their client to a long prison stay, given the “leniency” afforded many large banks and their employees for similar conduct.

In a letter to Berman, lawyers for Atilla, a former deputy general manager at Turkey’s state-controlled Halkbank, said “notions of comity” weighed against a stiff punishment at his May 7 sentencing.

US prosecutors accused Atilla, 47, a Turkish citizen, of conspiring with wealthy gold trader Zarrab and others in using fraudulent gold and food transactions to help Iran evade sanctions.

They have said a roughly 20-year prison term for Atilla would be appropriate. “Despite the involvement of numerous large international banks in past large-scale sanctions violations no banker other than Mr. Atilla has ever been charged for such conduct, much less sent to prison,” Atilla’s lawyers said in the latter.

Berman, they added, “can prevent further disparity in Mr. Atilla’s treatment” by taking into account the leniency afforded those banks and their employees, both US and non-US citizens, who violated sanctions.

Zarrab pleaded guilty and testified against Atilla as the US government’s star witness. Turkish President Erdoğan has denounced the case, calling it a politically motivated attack on his government.

The letter from Atilla’s lawyers came in response to a request by Berman that they and prosecutors answer several questions about the case. Asked who were the “chief financial beneficiaries” of the sanctions evasion scheme, prosecutors said, “First and foremost, the scheme benefited the Iranian government entities whose access to oil revenue and to the US financial system was restricted under the sanctions laws.”

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