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Turkish-Iranian gold trader says he paid bribes

November 30, 2017

A Turkish-Iranian gold trader has testified in a US court that he paid bribes as part of an Iran sanctions busting scheme. The case implicates Turkey's former economy minister and bankers close to the government.

Reza Zarrab
Image: Getty Images/AFPO. Kose

An Iranian-Turkish billionaire businessman testified at a New York trial on Wednesday that he paid Turkey's former economy minister tens of millions of euros in bribes as part of an oil-for-gold Iran sanctions-busting scheme.

In a highly charged trial being closely watched in Turkey, Reza Zarrab said he paid former Economy Minister Zafer Caglayan between 45 and 50 million euros (more than $50 million) in bribes in 2012 and 2013 in order to secure his help in evading US sanctions on Iran.

Zarrab, who has pleaded guilty to seven charges as part of a plea deal with federal prosecutors, has turned into the prosecution's star witness in a trial that started on Tuesday.

The only defendant now on trial is Hakan Atilla, the former deputy general manager of Turkish state-owned bank Halkbank. He denies the charges.

Seven other defendants are accused of being involved, including Caglayan and ex-General Manager of Halkbank Suleyman Aslan. All remain at large in Turkey.

Zafer Caglayan
Zafer Caglayan resigned shortly after the December 2013 corruption scandal. Image: picture-alliance/dpa

Turkey blames Gulen

US prosecutors say the scheme enabled hundreds of millions of euros in Iranian oil proceeds to move through the international banking system in violation of US sanctions.

The US trial could ultimately reveal damning information about corruption and a potential cover-up by the government of Turkish President Recep Tayyip Erdogan, who at the time was prime minister.

Erdogan and other top Turkish officials have accused the trial of being a plot backed by US-based preacher Fethullah Gulen, whom the Turkish government blames for last year's failed coup attempt. The trial has added to already tense relations between the United States and Turkey. 

On Thursday, Turkish Deputy Prime Minister Bekir Bozdag told state-run Anadolu Agency that "Zarrab has become a slanderer under pressure." He reiterated the government's claim that Gulen is behind the case. 

Read: Reza Zarrab 'goldfinger' trial puts strain on US-Turkey ties

Zarrab testified that he originally approached Aslan in 2011 to open an account at Halkbank to hide transactions and run the oil-for-gold scheme to help Iran get around US sanctions, but was turned down because he was too well-known. Zarrab is married to Turkish pop star Ebru Gundes.

"My wife is a famous artist in Turkey, I was someone who was always in the public light," Zarrab told the trial.

He testified that he then approached Caglayan to use his influence to allow the sanctions busting trade and force Halkbank to help.

"I met face-to-face with Caglayan. He asked details about the trade. He asked about the profits and said we could split the profits 50-50," Zarrab said.

Atilla then helped cover up transactions with Iran that allowed Tehran to skirt sanctions, Zarrab testified.

Zarrab also said he secured the help of Turkey's former EU Minister Egeman Bagis to process Iranian transactions through Turkey's Aktif Bank before working with Halkbank. However, Aktif Bank ultimately shut down the bank account after being warned by the United States, Zarrab said.

Brushed under the rug

Zarrab was at the center of a December 2013 corruption scandal in Turkey that almost brought down then Prime Minister Erdogan's government.

Prosecutors in Turkey alleged he bribed high-level officials to facilitate the illicit transactions with Iran.

Three ministers implicated the corruption probe, including Caglayan, were ultimately forced to resign even though they claimed their innocence.

Among the evidence prosecutors brought forward were shoeboxes of cash and luxury goods found with ministers, bankers and their relatives.  

A wiretapped telephone conversation was later leaked, in which Erdogan allegedly tells his son Bilal in December to conceal hundreds of millions of dollars in illicit money.

The Turkish government said the tapes were fake and part of a Gulen movement plot.

The charges against Zarrab and the ministers were ultimately dropped after Erdogan's government, who called the corruption allegations a coup, sacked prosecutors and police working on the case.

The 2013 corruption scandal was the opening salvo in a power struggle between the government and the Gulen movement.  

ng, cw/rc (AFP, AP, dpa, Reuters)