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Wednesday, May 22, 2024 | Back issues
Courthouse News Service Courthouse News Service

Turkey Seizes Assets of Presidential Ally Who Flipped

The Turkish government seized the assets of a gold trader and his family on Friday, in retaliation for his testimony implicating President Recep Tayyip Erdogan and other high-ranking officials in a multibillion-dollar scheme to bust Iran sanctions.

MANHATTAN (CN) – The Turkish government seized the assets of a gold trader and his family on Friday, capping off a week of dramatic testimony by the man implicating President Recep Tayyip Erdogan and top officials in a multibillion-dollar money-laundering scheme.

CNN Turk reported the news this morning as wealthy businessman Reza Zarrab spent a third day on the witness stand in a New York federal courthouse.

After telling the court Thursday that it was Erdogan who gave the order for Turkish banks to trade with Iran in violation of U.S. sanctions, Zarrab talked today about a meeting in early 2013 at a Marriott Hotel in Ankara between Iranian officials and Suleyman Aslan, who was then the general manager of the state-run Halkbank.

Aslan, who is under indictment in the United States but still at large, was the only Halkbank official at the meeting, Zarrab said.

There, “the Iranians put pressure on Suleyman on their ability to make direct payments on their own,” Zarrab added.

Iran’s then-oil minister also attended the meeting with his delegation, Zarrab said. At the time, the United States had changed its sanctions regime against Iran banning the trade of oil for gold.

Zarrab, who previously testified that his money-laundering scheme relied upon such transactions, said that the policy shift made them adopt a new method of funneling assets in the form of sham humanitarian food aid.

Lower-level employees at Halkbank did not know about “the situation,” Zarrab said, explaining he meant that the transactions were “not real food.”

Now facing fierce retaliation in his country, Zarrab has provoked a firestorm in Turkey, especially on social media, where many view his testimony as a reckoning over a 2013 corruption scandal that stained top Erdogan allies.

Zarrab previously testified that he paid more than $50 million in bribes to Turkey’s then-economic minister Zafer Caglayan, whose investigation by Turkey evaporated along with those of other prominent officials.

The New York Times reported that mainstream Turkish television and news outlets have largely kept the government’s line, and one of its reporters tweeted today that hackers locked her out of two social-media accounts.

“My Twitter account has been hacked from Turkey,” former Turkey correspondent Ceylan Yeginsu wrote this morning on Twitter.

She tweeted later that hackers commandeered her Instagram account to post pictures.

In the United States, Zarrab’s testimony has caught attention because of its possible connection to former White House national security adviser Michael Flynn, who pleaded guilty today to lying to the FBI in its Russia probe.

One revelation on the Turkish intrigue from this morning’s plea shows that Flynn lied on government forms about a project his company was working on for the benefit of the Turkish government.

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

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.

Zarrab’s testimony continues on Monday, running overtime from its original anticipated end date today.

Categories / Criminal, Financial, Government, International, Trials

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