A Turk who hauled massive amounts of gold in a record-breaking sanctions-busting scheme remembers his first conversation about it vividly, some 12 years on.
In 2008, Adem Karahan was recruited to help funnel billions of dollars, first by carrying suitcases full of gold or cash and later as a proxy for companies moving money through bank wires, all to help Iran evade U.S. economic sanctions by delivering illicit cash from oil sales.
In an exclusive interview, Karahan told Courthouse News Service and OCCRP that the boss of the operation, Turkish-Iranian money launderer Reza Zarrab, assured him he had nothing to fear from Turkish authorities.
“The government is in on it,” Karahan recalls Zarrab saying.
When Karahan expressed disbelief, Zarrab added, “You will see it soon.’’
Zarrab was right.
Five years later, Istanbul police pursuing allegations of bribery involving top government officials said exactly the same thing.
And in the U.S. District Court for the Southern District of New York in 2017, Zarrab himself unraveled the international conspiracy that used Turkey’s state-run Halkbank in what prosecutors called a “fraud of global proportions” in violation of U.S. sanctions aimed at curbing Iranian nuclear arms development.
In testimony that rattled U.S.-Turkish relations, Zarrab said Turkish President Recep Tayyip Erdoğan ordered the illicit trade. Zarrab also accused former senior Turkish officials, including former Economy Minister Zafer Çağlayan, of accepting enormous bribes to look the other way.
The scheme, which ran for as long as eight years, made Zarrab fabulously wealthy before he turned 30. In a conservative estimate for the Iran conspiracy, prosecutors said it moved at least $20 billion from 2010 to 2015 alone.
Zarrab was well paid for his work. A Standard Chartered Bank Newark branch Suspicious Activity Report (SAR) filed to the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) in late 2016 notes that Karahan once told Turkish authorities that Zarrab charged 8 percent for his services.
The SAR was likely a response to comments from Karahan, who was quoted in Turkish media as saying, “Four percent went to politicians, and four percent went to Zarrab.”
That’s $800 million in three years for Zarrab alone, assuming he paid as much in bribes as Karahan claimed. Turkish officials have said Zarrab shelled out tens of millions of dollars to one politician alone.
The 2013 Turkish bribery investigation was quashed, and police and prosecutors who briefly jailed Zarrab were punished.
Erdoğan also tried to protect the money launderer in 2016 and 2017, when the FBI snared Zarrab as he arrived in Miami, forever interrupting a Florida vacation for him, his Turkish pop-star wife, Ebru Gündeş, and their young daughter.
The Turkish government launched an intense Washington lobbying campaign, seeking to scuttle the case. Erdoğan himself contacted President Donald Trump, asking for Zarrab’s release. It came to nothing.
Zarrab pleaded guilty to various crimes related to fraud and money laundering, and became a government witness in return for leniency. His testimony helped convict Mehmet Hakan Atilla, a Halkbank manager, and he is widely expected to testify again next year when the bank itself stands trial.
Karahan, who for years helped execute the brazen money laundering scheme, said Zarrab has told only part of the story. He said the conspiracy started earlier, lasted longer, extended further, and involved more people and countries than jurors in Atilla’s trial were told.
Speaking through a translator in hours of telephone interviews over several months, Karahan implicated former Iran President Mahmoud Ahmadinejad and a relative of Erdoğan who serves in the Turkish government.
Karahan, who said he started work for Zarrab as a security guard in 2006 before joining the money laundering operation, detailed a variety of smuggling operations. He said he carried gold to Dubai and currency to a number of countries, including Iran, Russia, and the United Arab Emirates, from 2008 to 2013. He said he opened shell companies in his own name at Zarrab’s direction for use in money laundering.