Turkish President Implicated in Iran Sanctions Case

Ahead of a May 16 meeting with U.S. President Donald Trump at the White House, Turkish President Recep Tayyip Erdogan and his wife, Emine, disembark from a plane after arriving in Washington on May 15, 2017. (Presidency Press Service/Pool photo via AP)

MANHATTAN (CN) – The U.S. government’s key witness in a trial over billions of dollars funneled to Iran implicated Turkish President Recep Tayyip Erdogan in the scheme Thursday.

“What I’m saying is that the prime minister at that time period, Recep Tayyip Erdogan, and minister of the treasury, Ali Babacan, had given orders to start doing this trade,” Reza Zarrab testified this morning.

A wealthy businessman who has been cooperating with U.S. prosecutors as part of a plea deal in the same case, Zarrab has been regaling jurors for two days about bribes to Turkish officials and a complicated scheme in which using gold trades were used to circumvent U.S. sanctions against Iran.

Erdogan would not become president of Turkey until 2014. It was as the country’s prime minister, Zarrab said, that Erdogan ordered trades between Iran and Turkey’s Ziraat Bank and Vakif Bank.

Reza Zarrab, a 34-year-old gold trader who was charged in the U.S. for evading sanctions on Iran, is pictured in this Dec. 17, 2013, photo surrounded by the media at a courthouse in Istanbul. The case against Zarrab is built on work initially performed by Turkish investigators who targeted him in 2013 in a sweeping corruption scandal that led high up to Turkish government Turkey’s official news agency reported that prosecutors there launched an investigation on Nov. 18, 2017, into two U.S. prosecutors involved in trying the Turkish-Iranian businessman. (Depo Photos via AP)

Zarrab said he assumed Ziraat Bank had offices in New York at the time of the trades.

Before this morning’s testimony, Erdogan released a statement defending his government’s conduct.

“We have both energy and trade relations with Iran,” Erdogan said, according to a translation by City University of New York professor Louis Fishman.

“We did not violate the [U.S.] embargo,” the Turkish president added. “Whatever happens in trial we did the correct thing. We did not have such an commitment to U.S. The world does not consist of the U.S. alone.”

Zarrab specified that he did not have direct knowledge of Erdogan’s alleged order, which he said he learned about from Turkey’s then-economic minister Zafer Caglayan.

A day earlier, Zarrab claimed to have bribed Caglayan between “45 and 50 million in euros” and more in other currency in service of the money laundering scheme, and the alleged corruption scheme expanded again today.

Zarrab said that he paid $2 million to Suleyman Aslan, the general manager of the state-run Halkbank.

The allegation put prosecutors one step closer to the man on trial: Mehmet Atilla, a manager at the same bank.

Zarrab did not accuse Atilla of corruption: Paying off anyone else was unnecessary, Zarrab said, because Caglayan and Aslan were already on the payroll.

“I was already giving bribes to the Turkish minister of the economy,” Zarrab noted.

But Atilla, according to Zarrab, was necessary to formulate a scheme to disguise Iranian assets in the form of food aid, which prosecutors claim to have been a sham.

Prosecutors played two audio recordings today of conversations between Zarrab and Atilla speaking of these transactions in Turkish.

During one of these conversations, Zarrab claims that Atilla told him: “Yes, I have knowledge of this matter,” referring to the Iranian transactions.

Atilla’s name had previously received scant mention, even though he is the sole defendant.

During opening statements, Assistant U.S. Attorney David Denton called Atilla the “architect” of the money laundering scheme, and he introduced a message indicating that the 47-year-old bank manager helped create the system.

Asked whether he had a “problem with the method proposed by Hakan Atilla” in April 2013, Zarrab replied: “No, that is absolutely the correct method.”

Prosecutors also introduced evidence through WhatsApp, the popular chat platform for encrypted communications.

“Generally, we were writing on WhatsApp the sensitive subjects, the private subjects and the important subjects,” Zarrab said.

In one message entered into evidence, Zarrab told Aslan: “My dear general manager, I started food today,” which he described as another nod to the Iran trades.

Zarrab’s testimony has received intense attention in Turkey, where Erdogan’s opponents see it as a reckoning over a 2013 corruption scandal that implicated several top people in the Turkish government.

One of those officials, former Turkish Minister of the Interior Muammer Guler, was caught up in that probe through his family, and Zarrab said today that he paid that man’s son Baris a $100,000 bribe.

The United States had Zarrab arrested in March 2016, years after the Turkish prosecution Erdogan described as a “judicial coup” evaporated.

The gold trader’s plea deal has raised eyebrows on both sides of the globe, with multiple outlets reporting that Zarrab may be cooperating in a probe of former White House national security adviser Michael Flynn.

As part of his investigation of Russian interference in the 2016, the Department of Justice’s special counsel Robert Mueller is reportedly eyeing whether Trump’s former national-security adviser Michael Flynn considered kidnapping a Turkish dissident living in Pennsylvania and delivering him to Erdogan in exchange for $15 million.

NBC reported that Mueller may also be interested in whether Turkish government officials ever sought Flynn’s help in winning Zarrab’s release from prison.

Zarrab has not testified to any of these U.S. political ripples of his case so far.

His testimony, originally expected to conclude Friday, is likely to last far longer because the prosecution’s direct examination has not yet ended. Atilla’s attorneys will likely then try to undermine Zarrab’s statements on cross-examination.

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