Turkey’s State-Run Halkbank Must Face Sanctions Case

(CN) — Turkey’s state-run Halkbank cannot dismiss an indictment accusing the bank of helping funnel more than $20 billion for Iran in violation of U.S. sanctions, a federal judge ruled on Thursday.  

“The court concludes that Halkbank is not immune from prosecution,” U.S. District Judge Richard Berman wrote in a 16-page opinion.  

The case against Halkbank stems from the prosecution of an Iranian-Turkish gold trader Reza Zarrab, who turned state’s witness after pleading guilty to what prosecutors describe as a record-breaking money laundering scheme.  

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 case also has embarrassed President Donald Trump, who reportedly tried to scuttle the case against Halkbank as a favor for Erdoğan.  

Zarrab, whose company Royal Holding had an office in Trump Tower Istanbul, was previously represented by the president’s attorney Rudy Giuliani.  

Since Halkbank’s indictment in October—shortly after Trump’s precipitous withdrawal of U.S. troops from Syria after a phone call with Erdoğan—the Turkish bank has fought hard to duck the charges. Halkbank initially refused to appear in a New York court and accept U.S. jurisdictions, agreeing to participate in the proceedings only after being threatened with heavy fines for contempt of court. The bank has pleaded not guilty and is awaiting trial next March. 

Halkbank’s attempt to claim to be shielded by the Foreign Sovereign Immunities Act and duck the case on other grounds fared no better. 

“For one thing, FSIA does not appear to grant immunity in criminal proceedings,” wrote Berman, a Bill Clinton appointee.  

The judge also rejected Halkbank’s claim that he had no jurisdiction over a Turkish bank. 

“The court clearly has personal jurisdiction over Halkbank,” the ruling states. “It is axiomatic that where, as here, a district court has subject matter jurisdiction over the criminal offenses charged, it also has personal jurisdiction over the individuals charged in the indictment.” 

In an investigation last month, Courthouse News and the Organized Crime and Corruption Reporting Project published an exclusive interview with Zarrab’s former courier Adem Karahan on his former boss’s money laundering empire. Karahan alleged that Erdoğan’s son-in-law Berat Albayrak helped Zarrab open a bank account at Turkey’s Aktif Bank.  

Albayrak, who had been the CEO of Aktif Bank’s corporate parent Çalık Holding at the time, was implicated in Halkbank’s indictment. Prosecutors wrote that he “instructed” Halkbank to resume sanctions-busting trades after the exposure of Turkey’s corruption scandal in 2013. 

A Turkish criminal court issued an order blocking access to that article in Turkey, which instituted sweeping new social-media censorship laws Thursday.   

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