The Turkish government on Friday moved to seize assets belonging to a gold trader who, a day earlier, testified in US federal court that Turkish President Recep Tayyip Erdogan helped Iran evade sanctions.
Reza Zarrab, an Iranian-Turkish gold trader currently testifying in a New York criminal trial, is now under investigation by the Terror and Organized Crime Bureau of the Istanbul Public Prosecutor’s Office, according to Turkey’s state-run Anadolu News Agency.
Friday, the Turkish law enforcement agency decided to confiscate property that belongs to Zarrab and his relatives, the news agency said. Zarrab is married to the Turkish pop-folk singer Ebru Günde?. Zarrab is being investigated for risking the security of the Republic of Turkey and aiding a foreign state.
These accusations come immediately following Zarrab’s explosive testimony in US federal court Thursday, when he claimed that Erdogan played a role in helping Iran launder funds from oil and gas sales through Turkish banks. Zarrab has pleaded guilty to bank fraud and money laundering, admitted to running the international scheme, and is now testifying against a Turkish banker on trial.
Turkey’s government has rebuked the US investigation, portraying it as a wild conspiracy against Turkish politicians. Turkish Prime Minister Binali Yildirim said Friday that he hopes Zarrab will cease cooperating with US prosecutors.
“This court case has stopped being judicial and became completely political, with the sole aim to corner Turkey and its economy and damage the country,” Yildirim said.
Money laundering claims
The current trial centers on allegations that the deputy manager of Turkey’s state-run Halkbank, Mehmet Hakan Atilla, committed bank fraud and money laundering by secretly moving billions of dollars of Iranian money internationally in violation of international sanctions.
For years, US and United Nations sanctions on Iran have kept that country from accessing billions of dollars stored in banks around the world. The tactic is meant to punish Iran for its attempts to develop nuclear weapons.
During his testimony this week, Zarrab has detailed how his network of shell companies relied on Turkish banks and officials to illegally move Iranian money.
Friday, Zarrab said his cash-for-gold scheme that allowed Iran to pay off international debts stopped working when stricter rules caused closer scrutiny in the gold trade. Zarrab testified that his criminal network instead started faking food shipments, hiding behind sanctions exemptions that allowed Iran to trade food.
Zarrab gave sworn testimony that his scheme had direct involvement with the Central Bank of Iran — and that he personally met with the head of Iran’s central bank, Mahmoud Bahmani.
“They didn’t care whether the system used food or gold,” Zarrab said. “The primary concern for Iranians was their international payments being made.”
Zarrab said no food was ever shipped. He disguised the ruse by faking documents that logged non-existent trades among his own shell companies, which posed as a food supplier, a food distributor and a shipping firm in Turkey or Dubai.
Zarrab claimed that, at one point, he extended his cash-for-gold scheme to Chinese banks, conducting a test run by moving 1 million euros into the China Construction Bank Corporation — one of that country’s four largest financial institutions. However, he said, Chinese banks quickly caught on to the fact that he was trading with Iranians, and the Chinese banks promptly blocked him from doing so.
In court, American prosecutors played several recorded calls between Zarrab and his lieutenants in which they discuss their illegal operations in 2013.
More testimony to come
Turkish police started a probe into Zarrab’s network in 2013. But that investigation fizzled out under political pressure, according to analysts who monitor Turkish politics. The US investigation is seen as a continuation of that effort outside of Turkey — and the trial will include testimony from one of those Turkish police officers.
Zarrab is scheduled to continue his witness testimony against Atilla in New York federal court Monday. He has not yet been cross-examined by Atilla’s attorneys, who are expected to question his credibility given that Zarrab claimed his innocence for more than a year until his surprise guilty plea was revealed this week.
