Turkey’s Halkbank says US sanctions case punishment for Syria operation

ISTANBUL — Turkey’s state-run Halkbank on Wednesday denied any wrong-doing after US prosecutors charged it with a scheme to evade sanctions on Iran, saying the case was introduced to punish Turkey for its military operation in Syria.

The US Department of Justice said on Tuesday it had charged the bank with six counts of fraud, money laundering, and sanctions offences — arguing Halkbank was guilty of “illegally giving Iran access to billions of dollars’ worth of funds”.

The case comes at an extremely sensitive time between Washington and Ankara, with the US slapping sanctions on Turkey on Monday over its military offensive against Kurdish fighters in north-eastern Syria.

The charges “were filed as part of the sanctions introduced against our country by the US government in response to Operation Peace Spring, heroically launched by the Turkish Army to secure our borders and establish peace in the region”, Halkbank said in a statement.

US prosecutors say Halkbank was involved in a massive gold-for-oil scheme that allowed around $20 billion of illegal Iranian money to be deposited with it between 2012 and 2016.

Iran’s government used the money — much of it from oil and gas sales — to buy gold, the prosecutors allege.

They claim that high-ranking officials in Turkey’s government received bribes worth tens of millions of dollars paid from the proceeds of the scheme to shield it from US regulators.

Halkbank said on Wednesday that the case “relies heavily on unreliable testimony from witnesses who lack the necessary credibility” and that prosecutors had ignored evidence and witnesses proposed by the bank.

Speaking to reporters in parliament, President Recep Tayyip Erdogan said the charges were an “illegal, ugly step”, according to the Anadolu news agency.

US prosecutors have charged nine individuals in relation to the case, including Mehmet Hakan Atilla, a deputy director general of the bank, who was convicted last year of plotting to help Tehran evade American sanctions on Iranian oil proceeds.

Atilla was found guilty in January 2018 following a five-week trial in New York. He was released from prison in July this year.

Atilla’s conviction hinged on the testimony of Turkish-Iranian gold trader Reza Zarrab, who was arrested by US authorities in 2016 after jetting to Florida with his pop-star wife and child on a family holiday to Disney World.

Zarrab initially pleaded not guilty then flipped, becoming a US government witness after admitting being involved in the sanctions-busting scheme.