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.
Senate Confirms Ambassador Nominees to Armenia, Azerbaijan
Senate Foreign Relations Committee Ranking Member Robert Menendez Reiterates Key Concerns
WASHINGTON, D.C. – In the final days of the 115th Congress, last week, the U.S. Senate confirmed by a voice vote Ambassadorial nominees Lynne M. Tracy and Earle D. Litzenberger to represent the United States in Armenia and Azerbaijan, respectively.
Last month, during the Senate Foreign Relations Committee (SFRC) business meeting on the nominations, Ranking Member Robert Menendez (D-NJ) explained his support for both candidates, as well as the importance of strong U.S.-Armenia relations.
“Armenia and the Caucasus region will continue to be vital to regional and global security. According to the OSCE, Armenia’s elections over the weekend met international standards. I look forward to supporting the government’s efforts to build strong democratic institutions, a vibrant Armenian economy, and oppose any efforts to violate Armenia’s sovereignty,” Ranking Member Menendez said.
During Ambassador-designate Tracy’s nomination hearing she promised to support Armenia’s “remarkable” democratic reforms. As to questions at the hearing by SFRC Ranking Member Menendez and Senator Ed Markey (D-MA) on the Armenian Genocide, she agreed that “1.5 million Armenians were deported, massacred, or marched to their death in the final years of the Ottoman Empire” in 1915, but fell short of properly categorizing the killings as genocide.
“Throughout my time in the Senate, I have advocated for an honest accounting of the Armenian genocide. I believe we have a moral imperative to recognize the atrocities that were committed against the Armenian people. Ms. Tracy’s experience in Russia and Central Asia positions her to help navigate U.S. policy in this critical time. I support this nomination, but expect to work closely with Ms. Tracy on how she will encourage an honest acknowledgement of the Armenian Genocide, support Armenia’s ongoing efforts to ensure accountable, citizen-responsive governance, and support efforts to reach a peaceful settlement of the Nagorno-Karabakh conflict,” he added.
During the SFRC business meeting, Senator Menendez also noted the importance of safety in Artsakh (Nagorno Karabakh), and his expectations for the U.S. Ambassador selected to be the representative in Azerbaijan.
“I support Mr. Litzenberger’s nomination and expect to have close and continuing dialogue with him on how he will urge the Azeris to step back from any threatening behavior that could disrupt the line of contact in Nagorno Karabakh, support respect for human rights, and support efforts to reach a peaceful settlement of the Nagorno Karabakh conflict,” Senator Menendez said.
The hearing for Ambassador-designate Litzenberger occurred in October, wherein he restated the U.S. position condemning violence along the line of contact, which undermines the peace process and violates the 1994 cease-fire agreement.
“We appreciate the important issues raised by Senators Robert Menendez and Ed Markey during the confirmation process. We look forward to working with the new Congress to ensure robust assistance to further Armenia’s democratic development,” Armenian Assembly Executive Director Bryan Ardouny said.
Former U.S. Ambassador to Armenia, Richard Mills, concluded his tenure in Yerevan in October 2018, whereas former U.S. Ambassador to Azerbaijan, Robert Cekuta, concluded his tenure in Baku in March of 2018. Interestingly, the post of U.S. Ambassador in Ankara has been vacant since October 2017, with no nomination pending.
Lynne M. Tracy of Ohio is a Career Member of the Senior Foreign Service, Class of Minister-Counselor, currently serving as Senior Advisor for Russia Affairs at the U.S. Department of State. Previously, she served as Deputy Chief of Mission at the U.S. Embassy in Moscow, Russia; Deputy Assistant Secretary for Central Asia in the Bureau of South and Central Asian Affairs at the Department of State; Deputy Chief of Mission at the U.S. Embassy in Ashgabat, Turkmenistan; and Principal Officer at the U.S. Embassy Branch Office in Astana, Kazakhstan. Additionally, Ms. Tracy served as the Principal Officer at the U.S. Consulate in Peshawar, Pakistan, where she was awarded the Secretary’s Award for Heroism. She is the recipient of the State Department’s Distinguished Honor Award. Ms. Tracy earned her B.A. from the University of Georgia and J.D. from the University of Akron.
Earle (Lee) Litzenberger is a career member of the Senior Foreign Service with the rank of Minister Counselor. He has served as the Senior Advisor in the Bureau of Political-Military Affairs (PM) since January 2018. Mr. Litzenberger has served as Deputy Chief of Mission to the U.S. Mission to NATO, Brussels (2014-2017), the U.S. Embassy in Belgrade, Serbia (2010-2013) and the U.S. Embassy in Bishkek, Kyrgyzstan (2006-2009). He was the NATO Deputy Senior Civilian Representative in Kabul, Afghanistan (2013-2014). His other overseas assignments include the U.S. Mission to the European Union, Brussels, and the U.S. Embassies in Kazakhstan, Bulgaria and Algeria, and the U.S. Consulate General in Marseille, France. Mr. Litzenberger has also served at the Department of State in Washington, in the Office of the Deputy Secretary, the Bureau of Near Eastern Affairs, and the Bureau of Political-Military Affairs. He holds a B.A. in History from Middlebury College and an M.S. in Strategic Studies from the U.S. Army War College. Mr. Litzenberger speaks French, Russian, Bulgarian and Serbo-Croatian.
Florida’s House Delegation Split on Supporting President Obama’s Call to Arm Syrian Rebels
Senate Confirms Next U.S. Ambassador to Turkey; Vote on Nominees to Yerevan, Baku Expected in December
By Taniel Koushakjian
FLArmenians Managing Editor
This week, the House and Senate considered measures concerning the Armenian American community. Congress was expected to pass a Continuing Resolution (CR) to avoid a government shutdown on September 30th, when current funding is set to expire. However, after President Obama’s primetime address on September 10th calling for the arming of Syrian rebels, the House voted on a measure to do just that and attached it as an amendment to the CR, setting up a complex and very interesting pattern of voting.
In what Roll Call described as a vote “fractured along untraditional [party] lines,” the House approved the CR 319-108, and 273-156 on the amendment to arm Syrian rebels. 143 Democrats joined 176 Republicans in support of the CR, while 55 Democrats and 53 Republicans opposed. On the Syria amendment, 159 Republicans were joined by 114 Democrats in support of the measure, while 85 Republicans and 71 Democrats opposed.
[Also on FLArmenians.com: From Crimea to Kessab: Did the West Approve the Attack on Kessab]
According to several interviews with Armenian American community leaders across the United States, an overwhelming majority support US airstrikes against ISIL. However, they do not support President Obama’s call to train and arm Syrian rebel factions, especially in the wake of the Turkish-backed rebel assault on the Christian Armenian town of Kessab, Syria earlier this year.
An analysis by FLArmenians.com reveals that House Veterans Affairs Committee Chairman Jeff Miller (R-FL), and Congressmen Alan Grayson (D-FL), and David Jolly (R-FL) voted against arming Syrian rebels, yet supported the CR.
Republican Congressmen Ted Yoho (R-FL), Ron DeSantis (R-FL), Bill Posey (R-FL), Richard Nugent (R-FL), Tom Rooney (R-FL), and Curt Clawson (R-FL) voted against both the amendment arming Syrian rebels and the CR. Interestingly, Democratic Congressman Alcee Hastings (D-FL), a member of the Congressional Black Caucus, and Rep. Lois Frankel (D-FL), opposed President Obama on both the Syrian amendment and the CR.
Everyone else stood with President Obama in supporting the amendment to arm Syrian rebels and for the CR.
While it is clear that Armenian Americans support the President’s vow to “destroy and ultimately defeat ISIL,” they are wary of training and arming Islamic rebel factions with known ties to al-Qaeda and that have a record of attacking Christians just like ISIL.
[Also on FLArmenians.com: U.S. State Department “Deeply Troubled” by Attacks Against Armenians in Kessab, Syria]
Florida Armenians have an important role to play in this debate. Many Armenian American families in Florida emigrated from Syria, mostly descendants of the 1915 Armenian Genocide. Some still have relatives there. They are uniquely familiar with the regional dynamics and can provide critical insight into what groups truly protect and respect religious minorities, be they Christian Armenian, Assyrian, or Yezidi.
Ambassador Nominees to Armenia, Azerbaijan, and Turkey
On Wednesday, the Senate voted 98-0 to confirm John R. Bass as the next U.S. ambassador to Turkey. Senate Foreign Relations Committee Chairman Robert Menendez (D-NJ), and Senators Barbara Boxer (D-CA), Mark Kirk (R-FL), and Ed Markey (D-MA) submitted to the nominee questions on the Armenian Genocide and Turkey’s blockade of Armenia. “We commend Chairman Menendez, and Senators Barbara Boxer, Mark Kirk and Ed Markey for their stance on issues concerning Turkey’s denial of the Armenian Genocide, the Turkish-Azerbaijani blockade of Armenia, and other critical issues affecting the region,” stated Armenian Assembly of America Executive Director Bryan Ardouny. “Following in the footsteps of Henry Morgenthau, the U.S. ambassador to the Ottoman Empire who in 1915 alerted the world to the Armenian Genocide, it is important that our Foreign Service officers execute a foreign policy that appropriately reflects America’s values,” he said.
Both Florida Senators Bill Nelson (D-FL) and Marco Rubio (R-FL) supported Bass’ nomination without question.
Also on Wednesday, the Senate Foreign Relations Committee heard testimony from President Obama’s nominees to be the next U.S. ambassador to Armenia and Azerbaijan, Richard M. Mills and Robert F. Cekuta, respectively. Both are expected to be confirmed by the full Senate sometime during the lame-duck session, which is scheduled to begin on Wednesday, November 12th.