US District Judge Richard Berman in Manhattan said on Monday that he wanted to know whether Iran employs any lawyers for Reza Zarrab, a wealthy Turkish-Iranian gold trader accused of helping that country evade US sanctions, a team that includes former New York City Mayor Rudolph Giuliani. In a brief order, Judge Berman said that he planned to ask at a hearing on Tuesday (May 2) whether Giuliani or any other lawyer for Reza Zarrab had been hired by Iran, the United States or Turkey.
The hearing will focus on whether conflicts of interest bar Giuliani and former US Attorney General Michael Mukasey from representing Zarrab. The trader has pleaded not guilty to US charges that he conspired to conduct illegal transactions through US banks on behalf of Iran’s government, violating US sanctions. He hired Giuliani and Mukasey, to try to negotiate a diplomatic resolution of his case between the US and Turkey.
Both attorneys have discussed Zarrab’s case with US authorities and Turkey’s autocratic President Recep Tayyip Erdoğan, who has accused US authorities of having “ulterior motives” in bringing the charges. In an affidavit filed last month, Giuliani, an adviser to US President Donald Trump, said authorities in both countries were “receptive” to a diplomatic deal.
Erdoğan has said a Turkish-Iranian businessman, Reza Zarrab, who was arrested in the US in 2016 for violating sanctions against Iran, is a Turkish citizen and that Turkey has to act to defend him. Speaking to Reuters news agency on April 27, Erdoğan said: “Zarrab is not the son of my father but he is a citizen of mine. If he has committed a crime, his dossier should be forwarded to the Justice Ministry. If he is arrested on trumped-up charges, we will fall into the category of a country that does not stand behind its citizens.”
Zarrab was the prime suspect in a major corruption investigation that became public in December 2013 in which then-Prime Minister Erdoğan’s inner circle was implicated. Zarrab was arrested by US authorities in Miami in March 2016 on charges of helping Iran process millions of dollars of transactions when it was under US sanctions for its nuclear program.
The Turkish President Erdoğan said Zarrab’s case will be one of the issues he will discuss with US President Donald Trump when they meet in May. However, shortly after Zarrab’s arrest, the same Erdoğan had said the arrest of the businessman in the US is “none of Turkey’s business.” “Dear friends, this is not an issue that concerns our country, but might be a court case for the laundering of illicit money, I do not know. I cannot make a statement without knowing the reason [for Zarrab’s arrest],” Erdoğan said back then.
Prosecutors have said they are concerned about conflicts because eight of the US banks involved in the case have been clients of Giuliani or Mukasey’s law firms, and because Giuliani’s firm, Greenberg Traurig, is a registered agent of Turkey.
Giuliani and Mukasey said in affidavits filed on April 20 that they did not believe they had any conflicts in representing Zarrab.
Greenberg Traurig was hired in 2014 as a subcontractor for the Gephardt Group, which provides lobbying services to Turkey, according to foreign agent registration records submitted to the court. Members of the firm have discussed U.S.-Turkish relations with U.S. lawmakers and their staff, the records show.
Zarrab is widely known in Turkey, as his name was embroiled into the Dec. 17-25, 2013, graft operations that involved four former ministers and other state officials. What disturbed Turkey’s President Erdoğan and other Turkish officials is that former US Attorney for the Southern District of New York Preet Bharara’s office cited the 2013 corruption investigation into Erdoğan and other Cabinet members in the Zarrab indictment in New York.
When the graft probe was launched, Erdoğan’s government retaliated by purging the police chiefs and prosecutors who initiated the corruption investigation and introduced new legislation that restructured the judicial system to establish more political control over it.
With all prosecutors either reassigned to other posts or dismissed, and some even later arrested, the probe was dropped and Zarrab was acquitted of charges thanks to government intervention in the legal proceedings. However, the New York District General Attorney’s Deputy Michael Lockart has urged that as the Attorney’s Office they “will prove the cooperation and coordination between high-level Turkish and Iranian officials with Turkish/Iranian gold trader Reza Zarrab to evade US sanctions.”
In an affidavit the court received last week, Zarrab’s lawyer and Former Mayor of New York City and close US President Donald Trump associate Rudolph Giuliani has claimed that none of the transactions Zarrab is alleged to have participated “involved weapons or nuclear technology, or any other contraband, but rather involved consumer goods.”
Giuliani and attorney general under the George W. Bush administration Michael Mukasey, who were added last month to the legal team of Reza Zarrab, have been working to resolve the case with Trump administration officials and the Turkish government instead of the US attorney’s office that is prosecuting him, according to a report in The New York Times on April 2.
Giuliani and Mukasey were reportedly bypassing the US Attorney’s Office for the Southern District of New York in efforts to negotiate a deal for their new client. The two men have also traveled to Turkey to meet with President Erdoğan to discuss a potential resolution of the case, with the knowledge of current Attorney General Jeff Sessions, court filings indicate.
Mehmet Hakan Atilla, Deputy CEO of largest state-run lender, Halkbank, was also arrested in New York by the agents of Federal Information Bureau (FBI) at John F. Kennedy Airport on March 27. Atilla was accused of conspiring with controversial Iranian-Turkish businessman Reza Zarrab “to evade US sanctions against Iran and 0ther offenses.”
Zarrab’s trial in the US has drawn much attention in Turkey as he was briefly detained in 2013 along with others from the inner circle of the ruling Justice and Development Party (AKP) government and then-Prime Minister Erdoğan for having paid Cabinet-level officials and bank officers bribes to facilitate transactions benefiting Iran.
After 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.
When he arrived in Miami in March 2016 for a holiday in Florida with his wife and daughter, Zarrab was arrested at the airport as part of an investigation by Preet Bharara, then-US attorney for the southern district of New York.
In December, Bharara, who indicted Zarrab on charges of violation of US sanctions on Iran, added new evidence to his indictment, claiming Deutsche Bank and Bank of America were swindled by Zarrab.
According to the indictment, Bharara claimed that Zarrab, 33, participated in transactions to benefit Iran-based Mahan Air, which the US government has sanctioned for providing services to Iran’s Quds Force as well as Hezbollah.
May 2, 2017