Turkey's president Erdogan approved the scheme to skirt around US sanctions on Iran, gold trader tells US court
Turkish government dismisses Reza Zarrab's evidence as a conspiracy
A playboy gold trader at the centre of a complex scheme to launder Iranian gold money said Recep Tayyip Erdogan, prime minister of Turkey at the time, approved financial transactions designed to help Tehran avoid US sanctions.
Reza Zarrab, 34, who holds Turkish and Iranian nationality, has already pleaded guilty to his role in a web of deals.
Now he is the prosecution’s star witness in its case against Mehmet Hakan Atilla, an executive at Turkey’s state-owned Halkbank, who has pleaded not guilty. In bombshell testimony, Zarrab said Mr Erdogan – who is now president – approved transactions by two Turkish banks who wanted to become involved in the Iranian trades.
“What I’m saying is that the prime minister at that time period Recep Tayyip Erdogan and minister of the treasury ... had given orders to start doing this trade,” he said.
His evidence threatens to drive a wedge between the US and Turkey as he explains how corruption reached the highest levels of the Ankara government.
After wearing drab prison clothing on Wednesday, he appeared in court yesterday dressed in an open-necked shirt and blazer, looking like the millionaire he is.
The change of clothes followed an intervention by the judge, Richard Berman, who questioned why he was in prison garb despite being released into FBI custody last month.
Giving evidence, Zarrab described a series of meetings in Turkey in 2012 during which he said he also met representatives of an Indian oil company to discuss moving money through his network. The prosecution introduced a transcript from an October 2012 phone conversation between Zarrab and the head of the Istanbul chief of traffic police. Zarrab said he and a delegation of senior oil executives were late in getting from one meeting to the next so he asked “to be able to use the emergency lane in getting there”.
It is the latest evidence of how the plot extended throughout Turkish public life. A day earlier Zarrab described paying millions of dollars in bribes to a former minister. Ankara has dismissed the allegations as part of an anti-Turkish conspiracy. The case has all the elements of a political thriller. It features gold bars in suitcases, a key witness who is one half of a celebrity couple and the potential to topple a government.
Zarrab is well known in Turkey for his personal submarine and gold-plated pistol and for his marriage to a pop star. He showed an aptitude for business from an early age, opening a tea trading company at the age of 16 when his family lived in Dubai.
On the first day of his evidence on Wednesday, Zarrab said he pleaded guilty to seven charges because “co-operation was the fastest way to accept responsibility and get out of jail”.
He said he approached Halkbank in late 2011 or early 2012 offering to use his expertise in gold trading in return for access to Iranian money but was rebuffed — in part because of his high profile.
Zarrab said he met Zafer Caglayan, Turkey’s minister for the economy, to ask for help in getting the bank to reconsider.
He said Mr Caglayan replied: “I can broker this, providing there’s a profit share, 50-50.”
The result was an arrangement that eventually saw Mr Caglayan paid as much as €50 million (Dh218.7m).
The Turkish government previously said that the former minister acted within the law and has dismissed much of the evidence as part of a plot to bring it down.
Zarrab used markers and a sketch pad to diagram the complex web of transactions needed to skirt around US and UN sanctions against Iran.
Turkish buyers of Iranian gas and oil would deposit money into an account belonging to the National Iranian Oil Company held at Halkbank, he said. The money would then be moved into an account held by an Iranian bank there before being transferred into one of Zarrab’s front companies.
He would use the money to buy gold and send couriers to collect the bars in suitcases.
“These couriers ... would transport the gold to Dubai,” he said, adding that the customs documents showed the cargo was being exported to Iran, via the UAE. “The gold would not go to Iran,” he said.
Instead another of his companies would sell the gold bars, converting them into dirhams which would then be paid into a local bank account, re-entering the global financial system so that Iran could use it to make international payments.
Prosecutors say the scheme exploited exemptions that allowed Iran to sell oil to Turkey so long as the proceeds were deposited in Turkish banks and used in trade with Turkey.
Zarrab’s role began to emerge in 2013 when a cargo plane loaded with gold bars was forced by fog to land in Istanbul as it flew from Ghana to Dubai.
He was arrested in March last year when he arrived in the US with $100,000 spending money on him for a family holiday at Disney World in Florida.
Updated: December 1, 2017 01:41 AM