A Turk­ish

In fed­eral court, he de­tails ef­fort to evade U.S. sanc­tions on Iran

The Washington Post - - FRONT PAGE - BY DEVLIN BAR­RETT devlin.bar­rett@wash­post.com

gold dealer tes­ti­fied in a fed­eral court that he paid bribes to Turkey’s then-econ­omy min­is­ter in a scheme to evade U.S. sanc­tions on Iran.

new york — A wealthy Turk­ish gold dealer stepped back into the pub­lic eye Wed­nes­day, tes­ti­fy­ing at a fed­eral trial here that he paid more than $60 mil­lion in bribes to Turkey’s then-econ­omy min­is­ter as part of a scheme to evade U.S. sanc­tions on Iran.

Af­ter more than a year in jail, Reza Zarrab, 34, be­came the star wit­ness Wed­nes­day at what was orig­i­nally meant to be his trial. In­stead, he cut a deal with the Jus­tice Depart­ment to tes­tify against oth­ers in the case.

Asked why he de­cided to flip against his al­leged co-con­spir­a­tor, Mehmet Hakan Atilla, a Turk­ish bank of­fi­cial, Zarrab an­swered, “Co­op­er­a­tion was the fastest way to ac­cept re­spon­si­bil­ity and get out of jail.”

Zarrab said the agree­ment with pros­e­cu­tors came af­ter a failed at­tempt by his Amer­i­can at­tor­neys to ar­range a “pris­oner swap” be­tween the United States and Turkey.

Wear­ing brown jail scrubs, Zarrab said he pleaded guilty to seven charges, in­clud­ing money laun­der­ing, evading sanc­tions, fraud and brib­ing a U.S. pri­son guard to smug­gle him al­co­hol and let him use the guard’s cell­phone.

Zarrab said he and Atilla were key play­ers in an in­ter­na­tional fi­nan­cial scheme to get Ira­nian oil-sale prof­its back to that coun­try de­spite U.S. sanc­tions against such trans­ac­tions.

In the early days of the scheme, Zarrab said, he moved 5 mil­lion to 10 mil­lion eu­ros a day for Ira­nian clients, but he wanted to do more. In early 2012, he ap­proached ex­ec­u­tives at Halk­bank, where Atilla was a se­nior of­fi­cial, sug­gest­ing that they deal with him di­rectly and use gold pur­chases to dis­guise money trans­fers, he said.

At first, a se­nior ex­ec­u­tive at the bank re­jected the of­fer be­cause Zarrab was too well known as the hus­band of a Turk­ish pop singer, he said. Zarrab said he then ap­pealed to Turkey’s econ­omy min­is­ter at the time, Mehmet Zafer Caglayan, to in­ter­cede on his be­half. Caglayan “asked about the profit mar­gins, and he said, ‘I can bro­ker this, pro­vid­ing there’s a profit share, 50-50,’ ” Zarrab tes­ti­fied.

Zarrab said he agreed to split his prof­its with the min­is­ter, and pros­e­cu­tors showed a spread­sheet de­tail­ing more than 30 mil­lion eu­ros’ worth of pay­ments in about a year.

All told, Zarrab said, he be­lieved he paid bribes to the min­is­ter of about 45 mil­lion to 50 mil­lion eu­ros as well as about 2 mil­lion Turk­ish lira and about $7 mil­lion.

The Turk­ish gov­ern­ment has said that Caglayan acted within the law.

Zarrab said that he helped move “a few bil­lion eu­ros’’ from Hal­bank ac­counts for the Ira­ni­ans, un­der the dis­guise of gold trans­ac­tions.

Asked by pros­e­cu­tors to walk the jury through his scheme, Zarrab be­came an­i­mated, stand­ing in front of an easel and draw­ing an in­creas­ingly com­plex di­a­gram chart­ing the flow of funds de­signed to con­ceal the move­ment of Iran’s prof­its from oil and gas sales to Turkey.

Pros­e­cu­tors also in­tro­duced tran­scripts of wire­tapped phone calls in which Zarrab spoke with oth­ers about com­pli­ca­tions and mis­steps in the scheme. At one point, ac­cord­ing to the tran­scripts, an Ira­nian oil com­pany mis­tak­enly sent a trans­fer of 70 mil­lion eu­ros di­rectly to Zarrab — which would have been an ob­vi­ous vi­o­la­tion of the sanc­tions. In the calls, Zarrab per­suaded a bank of­fi­cial to void the trans­ac­tion and make it ap­pear as if it never hap­pened, ac­cord­ing to the tran­script.

As his hand-drawn chart grew crowded with boxes in­di­cat­ing the en­ti­ties in­volved, Zarrab showed how it took 10 trans­ac­tions to prop­erly laun­der the funds.

Since Zarrab’s ar­rest in March 2016, the case has roiled U.S.Turkey re­la­tions. Zarrab is de­scribed by U.S. au­thor­i­ties as con­nected to se­nior mem­bers of the Turk­ish gov­ern­ment, which, in turn, has called his pros­e­cu­tion an at­tack on its coun­try.

Turk­ish pros­e­cu­tors an­nounced Nov. 18 that they had launched an in­ves­ti­ga­tion into two of the U.S. pros­e­cu­tors who have over­seen the Zarrab case, to de­ter­mine whether ev­i­dence was il­le­gally ob­tained. U.S. At­tor­ney Joon H. Kim, one of the of­fi­cials Turkey claims it is in­ves­ti­gat­ing, called the ac­cu­sa­tions “ridicu­lous on their face.”

Turk­ish Pres­i­dent Re­cep Tayyip Er­do­gan has per­son­ally lob­bied the U.S. gov­ern­ment to re­lease Zarrab and has linked the case to a failed 2016 coup at­tempt against him, claim­ing that the same forces be­hind the putsch — which he blames on a cleric named Fethul­lah Gulen who lives in Penn­syl­va­nia — are be­hind the sanc­tions case against Zarrab.

This month, af­ter it be­came clear that Zarrab might be co­op­er­at­ing with U.S. in­ves­ti­ga­tors, Turkey’s for­eign min­is­ter called him a “hostage’’ who was be­ing forced to tes­tify against the Turk­ish gov­ern­ment.


Reza Zarrab tes­ti­fied in New York that he was a key player in a scheme to get Ira­nian oil-sale prof­its back to that coun­try.

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