The U.S. attorney’s inquiry had long been a source of friction between the United States and Turkey because of the alleged involvement of Turkish officials. The new charges are likely to inflame that tension and will complicate Vice President Pence’s trip Wednesday to Ankara to discuss a possible cease-fire.
Trump’s own attitude on the matter, though, is something of a mystery. Turkish President Recep Tayyip Erdogan had lobbied the U.S. commander in chief to drop the prosecution of one key figure in the case and, in 2017, Trump sought to enlist then-Secretary of State Rex Tillerson to work with his personal lawyer Rudolph W. Giuliani on a deal that could stop it.
In a more recent prank phone call with a person he believed to be a Turkish official — but was not — Sen. Lindsey O. Graham (R-S.C.) said Trump was “very sensitive” about the case and “does not want that case to hurt our relationship.” The call was first reported by Politico and GQ.
Prosecutors allege in the new indictment that from about 2012 to 2016, Halkbank and its senior officers used front companies in Iran, Turkey and the United Arab Emirates and made “illicit transactions” that should have exposed the bank to sanctions under U.S. law. That allowed them to transfer about $20 billion of what should have been restricted Iranian funds. Assistant Attorney General for National Security John C. Demers called the case “one of the most serious Iran sanctions violations we have seen.”
Officials in Iran and Turkey, meanwhile, lined their pockets with tens of millions of dollars to shield those involved from U.S. regulators, prosecutors allege.
“The bank’s audacious conduct was supported and protected by high-ranking Turkish government officials, some of whom received millions of dollars in bribes to promote and protect the scheme,” U.S. Attorney Geoffrey Berman said in a statement announcing the indictment. “Halkbank will now have to answer for its conduct in an American court.”
Halkbank was charged with conspiracy to the defraud the United States, bank fraud and money laundering. The U.S. attorney’s office said it had previously charged nine people, including bank employees and a former Turkish minister of the economy, in the scheme.
The case against Halkbank was laid out in detail during the 2017 trial of Mehmet Hakan Atilla, a former executive at the bank who was convicted by a federal jury in New York of helping Iran evade U.S. sanctions.
The trial was most notable for the testimony of Reza Zarrab, a Turkish-Iranian gold trader who pleaded guilty and agreed to testify for the U.S. government, telling jurors he paid more than $60 million in bribes to keep the scheme going.
Atilla was a senior official at Halkbank who helped coordinate the plot. Starting in 2012, Zarrab testified, he paid Turkey’s then-economy minister Mehmet Zafer Caglayan a small fortune to help him hide the money transfers by making them look like gold purchases.
Zarrab’s testimony implicated Erdogan. At the trial, Zarrab said that when he sought Caglayan’s help setting the scheme in motion, the minister said he would do it if they could split the profits evenly. He also testified that he was told Turkey’s president knew about the scheme.
Turkey’s government has said Caglayan acted within the law, and accused the United States of taking Zarrab “hostage’’ to damage the country’s reputation.
Shortly before the trial began, Zarrab pleaded guilty to seven charges, saying he agreed to cooperate after failed attempts to win his freedom via a prisoner swap between the United States and Turkey. Trump had sought to enlist Tillerson to intervene in the case, so unsettling the then-secretary of state that he complained to then-White House chief of staff John F. Kelly.
The trial also featured testimony from a former Turkish police official whose government corruption probe was quashed.
The investigator, Huseyin Korkmaz, said he was imprisoned for 18 months, then fled Turkey with evidence from the case. Some of that evidence helped convict Atilla.
Erdogan’s government has charged that the original Turkish corruption probe — and the subsequent U.S. case — were part of a conspiracy against him by supporters of Fethullah Gulen, a Turkish cleric now living in Pennsylvania.
Ergogan has blamed Gulen for a failed 2016 coup attempt in Turkey, and demanded that the United States extradite him. The United States has rejected those demands.