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U.S. charges ex-Turkish minister with conspiring to evade sanctions against Iran

Sep 08, 2017

Washington Post, By Erin Cunningham

Thursday, 7 September 2017

 Federal prosecutors in New York have charged a former minister and other high-profile Turkish figures with conspiracy to evade U.S. sanctions on Iran, broadening an investigation into a Turkish Iranian trader to include allies of President Recep Tayyip Erdogan.

The case had already raised tensions between U.S. and Turkish officials, who have suggested that the probe is politically motivated. The investigation had focused mainly on Turkish Iranian millionaire Reza Zarrab, whose network of companies prosecutors allege was used to launder money for Iran.

But the indictment Wednesday named additional defendants, including former economy minister Mehmet Zafer Caglayan. It also charged Suleyman Aslan, onetime chief of the state-owned Halkbank, along with some of his deputies.

Caglayan is believed to be in Turkey, as is Aslan. Zarrab, 33, was arrested last year while on vacation in the United States and remains in U.S. custody. He has hired former New York mayor Rudolph W. Giuliani as his lawyer.

“Whoever brought those charges are responsible for proving them,” Turkish Economy Minister Nihat Zeybekci told reporters in Ankara on Thursday.

“Caglayan did not do anything against Turkey’s interests,” he said, according to the Reuters news agency. “It is no concern to Turkey if Caglayan acted against the interests of other countries.”

The indictment from the U.S. Attorney’s Office for the Southern District of New York charged that Caglayan, in his capacity as economy minister, accepted tens of millions of dollars’ worth of bribes from the proceeds of the scheme. He also “directed other members of the scheme” to engage in transactions that would evade or deceive U.S. regulators, the indictment says.

In more than 50 pages, prosecutors laid out what they say was a “multiyear scheme” to violate sanctions that involved senior government officials in Turkey and Iran.

The alleged crimes occurred at the height of U.S. sanctions in 2012 and 2013, ahead of the relaxation of restrictions that accompanied the implementation of Iran’s 2015 nuclear deal with world powers.

Before the deal, Iran was shut out of the U.S. financial system, and the U.S. government sought to punish other banks and businesses trading with Iran.

“If a foreign bank processed transactions relating to Iran, the U.S. would impose secondary sanctions — usually against the banks but also other companies — that would cut them off from the U.S. financial system,” said Timothy O’Toole, a sanctions specialist at Miller & Chevalier, a D.C.-based law firm.

Prosecutors said Zarrab and his co-conspirators sought to facilitate Iranian access, through money laundering, to proceeds from its oil and gas sales to Turkey. The conspiracy allegedly included a gold export scheme and transactions falsely described as payment for food and medicine for Iran.

Zarrab, who was born in Iran, has businesses in Turkey, the United Arab Emirates and China. In the indictment, the prosecutors quoted a letter he is alleged to have written to then-Iranian President Mahmoud Ahmadinejad, in which he said the Zarrab family was ready to collaborate to help Iran break free from “the grip of sanctions.”

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