Blog Archives

U.S. Indicts Turkey’s Halkbank for Illegal Transfer of Billions of Dollars to Iran

By Harut Sassounian

Halkbank, whose majority shareholder is the Turkish government, pleaded not guilty in New York on March 31, 2020, to criminal charges that it helped Iran illicitly transfer tens of billions in dollars and gold, wrote Aykan Erdemir and Philip Kowalski in an essay published on April 3 by the Foundation for Defense of Democracies, a policy institute based in Washington, D.C.

On October 15, 2019, the Federal Southern District Court of New York accused Halkbank of “fraud, money-laundering and sanctions offenses,” alleging that Halkbank and its executives aided Iranian-Turkish gold trader Reza Zarrab in a “multi-billion dollar scheme to circumvent U.S. sanctions on Iran.”

Initially, Halkbank refused to appear in court “claiming that the criminal charges are beyond the U.S. court’s jurisdiction,” Erdemir and Kowalski wrote. However, when “prosecutors proposed escalating contempt fines which could have totaled $1.8 billion after eight weeks,” the bank agreed to respond to the court charges.

Originally, the Turkish and Iranian officials had concocted a scheme to exchange gas for gold to circumvent the U.S. sanctions, by claiming that the gold was headed not to Iranian government entities but to Iran’s “private sector.” Erdemir and Kowalski stated that “the scheme ultimately yielded the Iranian regime some $13 billion in Turkish gold between 2012 and 2013. Once the U.S. Congress introduced legislation to close the ‘golden loophole’ in 2013, Iran used Turkish front companies to issue invoices for fake transactions of food and medicine that fall under the humanitarian exception to U.S. sanctions. In one infamous case of over-invoicing, a Turkey-based luxury yacht company used Halkbank to sell nearly 5.2 tons of brown sugar to Iran’s Bank Pasargad at the price of approximately $240 per pound.”

This scheme was first exposed in December 2013 by Turkish investigators who implicated then Prime Minister Recep Tayyip Erdogan, several of his ministers and other senior officials, including Halkbank’s managers. Erdogan shut down the probe by firing the police officials, prosecutors and judges!

The scandal resurfaced in March 2016 when Iranian-Turkish ring-leader Reza Zarrab was arrested in Miami after he flew to Florida to visit Disney World with his family.

In March 2017, U.S. authorities arrested Halkbank Deputy CEO Mehmet Hakan Atilla upon his arrival in New York. Zarrab pleaded guilty and agreed to testify in court against Atilla. Zarrab confessed that he had bribed senior Turkish ministers and top Halkbank executives. He even implicated Erdogan in the corruption scheme, stating that Erdogan had personally approved the illegal actions.

“Halkbank’s Atilla received a 32-month prison sentence in May 2018, a significantly shorter one than prosecutors had originally sought,” according to Erdemir and Kowalsky. “After Atilla’s return to Turkey, Erdogan rewarded the convicted sanctions buster by appointing him CEO of the Istanbul stock exchange, following the president’s established pattern of rewarding other senior accomplices of Zarrab with cushy appointments.”

Erdogan personally appealed to Pres. Trump and other senior officials to block the court case of Halkbank, claiming that US courts have no right to try Turkish citizens. The Courthouse News Service reported that “One of Zarrab’s shell companies, Royal Holding A.S., listed its address as a 35th floor unit in Trump Towers Istanbul. Before pleading guilty to money laundering, sanctions evasions and bribery, Zarrab retained Trump’s personal attorney Rudy Giuliani to lead a campaign of shadow diplomacy that echoed the one in Ukraine. Shuttling between Turkey’s capital of Ankara and the White House, Giuliani met with Erdogan, Trump, former Secretary of State Rex Tillerson, and other senior U.S. and Turkish officials in an attempt to negotiate a prisoner swap. The New York Times reported that Tillerson resisted the White House pressure for a deal that would have effectively killed the Zarrab case.”

Erdogan’s and Giuliani’s efforts succeeded in stalling the prosecution for almost two years, but ultimately failed when the U.S. Attorney’s Office for the Southern District of New York went forward with the charges last October.”

Senator Ron Wyden, the Senate Finance Committee’s top Democrat, told Courthouse News Service: “It sure looked like Donald Trump was doing the bidding of Erdogan and Giuliani, and there were real questions about whether this was about getting Halkbank off the hook, even though there were allegations that they were orchestrating the largest sanctions evasion scheme in history.”

During President Trump’s Senate impeachment inquiry earlier in 2020, Senators Wyden, Robert Menendez and Sherrod Brown asked a joint question which was read aloud in the Senate by Chief Justice John Roberts: “Has the president engaged in a pattern of conduct in which he places his personal and political interests on top of the national security interests of the United States?”

Wyden told Courthouse News Service: “Donald Trump has significant financial interest in Turkey,” referring to Trump Towers Istanbul. “We read regularly that his family has forged personal relationships with important Turkish officials. And so, you have to ask — which is what is part of our inquiry — whether the Trump policy toward Turkey is in a significant way colored by his personal and political interests and not the national security of the country.” If Halkbank is found guilty of violating U.S. sanctions, the court could impose a hefty penalty, regardless of Tump’s wishes.

Armenian Advocacy Groups: Contact White House, Congress

By Taniel Shant
FLArmenians Political Contributor

Armenian American advocacy groups, the Armenian Assembly of America (Assembly) and the Armenian National Committee (ANC), are currently urging the Armenian American community to voice their concerns to the federal government.

Last month, both groups issued ‘Action Alerts’ on issues of concern to the over 1 million strong Armenian American community. Here in Florida, there are approximately 30,000 Armenian Americans.

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With the inauguration of the President Donald J. Trump and the start of the 115th Congress, the groups called on their respective members to take action to boost the Armenian Caucus membership, express opinions regarding the nomination of Jeff Sessions for Attorney General and Rex Tillerson for Secretary of State, as well as contacting the Trump Administration to advance Armenian American policy priorities for 2017.

Prior to the calls for action, both the Assembly and ANC sent congratulatory messages to President Trump on his election (see the Assembly letter here and the ANC letter here).

The Assembly, an independent, non-partisan, Washington, D.C.-based organization, urged members to send messages to members of the Senate Judiciary Committee and Senate Foreign Relations Committee regarding nominees Sessions and Tillerson. Tillerson was confirmed by the Senate last week and Sessions is expected to be approved this week.

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The Assembly is currently seeking to boost the bi-partisan Congressional Caucus on Armenian Issues, which currently stands at 87 Members of Congress, a historic low. “The 115th Congress is at work, and we are turning to you to urge your Representative to join the Congressional Caucus on Armenian Issues,” read the Assembly statement. “We need to expand the Armenian Caucus to counter growing opposition, and hostility in the region. Our goal is to increase the number of Members who will speak up for the rights of the people of Armenia and Artsakh. Please urge your Representative to join the Congressional Caucus on Armenian Issues,” read the Assembly alert.

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The ANC, the U.S. arm of the Armenian Revolutionary Federation, a Yerevan-based Armenian political party, issued calls to its membership to outline key policy priorities to the Trump White House. “Ask President Trump to support Armenia,” reads the ANC alert. The ANC outlined three key policy areas: “Properly commemorating the Armenian Genocide as a clear case of genocide challenging Turkey’s obstruction of justice for this still unpunished crime and more broadly rejecting Turkey’s efforts to control U.S. policy on Armenian issues; Advancing a durable and democratic peace in the Caucasus by recognizing and supporting the independent Republic of Artsakh (Nagorno Karabakh) and; Growing the U.S.-Armenia economic military and political partnership and supporting a secure prosperous and democratic Armenia.”

You can take action on the Assembly and ANC alerts here and here.