Banker’s Lawyers Swing at Star Witness in Iran Sanctions Case

In this courtroom sketch, Assistant U.S. Attorney David Denton points at defendant Mehmet Hakan Atilla, right, during opening arguments of a trial, on Nov. 28, 2017, in New York federal court. Denton said Atilla, deputy CEO of Halkbank, was the architect of a “massively successful” scheme to dupe U.S. banks into letting Iran move money around the world. U.S. District Judge Richard Berman is seated at the bench, background left. (Elizabeth Williams via AP)

MANHATTAN (CN) – Embarrassing top Turkish officials with testimony about millions in bribes and billions in laundered money transactions to Iran, wealthy gold trader Reza Zarrab has transfixed his nation by turning against their president.

On Monday, attorneys for the state-run bank manager he is testifying against in New York made their first bid to turn the tables on the 34-year-old star witness for U.S. prosecutors with jailhouse recordings undermining his credibility.

Detailed in a letter to U.S. District Judge Richard Berman, the tapes are said to show Zarrab claiming he would lie on the witness stand to win a reduced sentence.

“In one of [the audio recordings], dated Sept. 15, 2016, Zarrab explicitly discusses the perceived need, when incarcerated in the United States, to lie ‘in order to get out or to get a reduced sentence,’” the three-page letter states.

“You need to admit to crimes you haven’t committed,” Zarrab continued, according to the letter. “In America in order to make it out of prison you need to admit to something you haven’t committed.”

The document hit the federal court docket during Zarrab’s fourth day of testimony against Mehmet Hakan Atilla, the general manager of the state-run Halkbank.

Atilla’s attorneys Victor Rocco previously described his client as a Turkish public servant caught up in an international firestorm. His legal team claims to have four other jailhouse recordings they believe will vindicate their client.

The defense attorneys added that the eleventh-hour appearance of these tapes demonstrates a clear failure by prosecutors to fulfill their obligations under the Brady rule, which bars government suppression of evidence that could favor a defendant.

But Zarrab’s testimony against Atilla has been overshadowed – both here and abroad – by his accusations against Turkish President Recep Tayyip Erdogan. Zarrab said Erdogan ordered two Turkish banks to execute laundered trades that would be in violation of U.S. sanctions.

Turkish authorities seized Zarrab’s assets shortly after that accusation.

Prosecutors entered this photo of Turkish gold trader Reza Zarrab as evidence in a trial of a Turkish banker accused of laundering money for Iran in contravention of U.S. sanctions.

The rich playboy also testified that he paid between “45 to 50 million” euros in bribes to Turkey’s economic minister Zafer Caglayan, and $100,000 bribe to the son of ex-Turkish interior minister Muammer Guler.

Zarrab has testified he made these payments to secure official approvals to create a byzantine system for funneling cash to Iran in contravention to U.S. sanctions. One of these schemes, he said, involved shipments of sham humanitarian food aid to Iran.

In testimony worthy of a blooper reel, Zarrab said his cover was almost blown when an official document meant to verify the legality of these shipments left him exposed.

One the forms, Zarrab said, mistakenly marked “Dubai” on the certificate of origin for wheat.

“Why is that an error?” Assistant U.S. Attorney Sidhardha Kamaraju asked.

“Because wheat doesn’t grow in Dubai,” Zarrab replied.

Before his arrest in the United States, Zarrab was one of several Erdogan allies to be swept up in a 2013 corruption scandal. Erdogan was prime minister of Turkey at the time, and was not elected president until 2014.

Zarrab testified on Monday morning that he paid money to secure his release from the Turkish prison.

“Were those payments bribes?” Assistant U.S. Attorney Sidhardha Kamaraju asked.

“Partly,” Zarrab replied.

Atilla’s attorneys describe Zarrab as a man willing to do anything to suit his personal self-interest.

“Zarrab is proclaiming his willingness to fabricate testimony out of whole cloth in order to obtain a reduced sentence,” Atilla’s attorneys at the New York-based firm Fleming Ruvoldt wrote. “The belated production of these statements … significantly impairs the ability of the defense to properly and effectively utilize them at trial.”

If they knew about the statements earlier, Atilla’s attorneys added, they would have investigated various new disclosures, including a “reference to ‘Bahram’s friends’ who met with Zarrab’s lawyer and said ‘that they hated him and wished him to get sentenced for 30 years.’”

These friends of “Bahram” could help the defense immeasurably with undermining Zarrab’s credibility, the letter states.

Regarding the language used by the speakers in these recordings, Atilla’s attorneys say a preliminary study reveals “that at least some of the belatedly delivered phone calls in the five audio files are in Azeri, not Turkish.”

“The translations received from the government are summaries only,” the letter states. “Our translators can understand some Azeri, but are not able to do full translations from that language. Thus, we cannot at this time immediately review all the audio files provided last night.”

Atilla’s attorneys say another production dump from the government at 11:57 p.m. Saturday included a folder with “very large files, seemingly containing pictures of invoices and a large number of Excel spreadsheets and other materials.”

“We are now reviewing this massive production,” the letter states. “But the belated production, in itself, constitutes still another heavy burden on the defense to analyze and react to the government’s ongoing delivery of large quantities of materials during the trial.”

Zarrab’s testimony over the past week has shaken political circles on multiple continents.
Some in the United States, meanwhile, see overlap between Zarrab’s testimony and the FBI’s investigation of Russia’s influence on the 2016 U.S. presidential election.

As part of the guilty plea Friday by Michael Flynn, the former White House national security adviser admitted that he lied on government forms about a project his company was working on for the benefit of the Turkish government.

Flynn initially claimed he did not know the extent of the involvement of Turkish government officials in the Flynn Intel Group Inc., but the statement of the offense says Turkish officials had supervised and directed the project.

This is not the first time Flynn’s work on behalf of the Turkish government has drawn intense scrutiny.

Multiple news outlets have reported the Department of Justice’s special counsel Robert Mueller has looked into whether Flynn considered kidnapping one of Erdogan’s opponents living in Pennsylvania and delivering him to Erdogan in exchange for $15 million.

NBC reported that, before Zarrab struck his plea deal, Flynn may have advocated to have the wealthy Turk released from prison.

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