Turkish prosecutors on December 1 ordered the seizure of assets of Reza Zarrab, the Turkish-Iranian gold trader who has implicated Turkey’s President Recep Tayyip Erdogan in the New York trial of a banker accused of violating US sanctions against Iran.
Zarrab, who has pleaded guilty to running the money laundering scheme that dodged the sanctions and is giving evidence for the prosecution in return for leniency, is a wealthy 34-year-old businessman who lived in Istanbul with his pop star wife. The Istanbul prosecutor's office said the assets of both Zarrab and his family would be confiscated as part of an investigation against the trader, Turkey's state media reported.
The media outlets also quoted Turkish Prime Minister Binali Yildirim as saying that his hope is that Zarrab will "turn back from his mistake" in co-operating with US prosecutors.
Zarrab is testifying against a former deputy CEO of Turkey’s state-owned Halkbank, Mehmet Hakan Atilla, whom he allegedly conspired with to assist Iran in laundering money earned on gas and oil sales to the Turks from 2010 to 2015. On November 29, he told the federal court he paid Zafer Caglayan, then Turkey's economy minister, bribes amounting to more than $59m to facilitate deals with Iran. Though charged, Caglayan has not surrendered himself to US law enforcement although he has publicly refuted Zarrab’s claims. Atilla has entered a not guilty plea.
Zarrab has further alleged that in 2012 he was told by Caglayan that Erdogan, who was prime minister at the time, had instructed certain Turkish banks to participate in the sanctions busting scheme.
Speaking on November 3 in a televised address to a congress held by his ruling AK Party, Erdogan said Turkey had not violated sanctions on Iran. "What did we do? We purchased natural gas from a country within our agreement so that our citizens would not get cold in the winter and the economy would keep running," he said, adding that Turkey "strictly" adhered to US and UN sanctions.
Without mentioning the Atilla trial specifically, Erdogan also said that Turkey cannot be tried by "virtual courts" in the US that have no jurisdiction over his country. He then accused the US courts of being made up of "lousy FETO [Fethullah Terrorist Organisation] representatives". That jibe was a reference to Muslim cleric Fethullah Gulen, who lives in self-imposed exile in rural Pennsylvania, and his supporters, whom the Turkish government blames for the attempted coup of July 2016. Gulen strenuously denies any involvement.
Erdogan and the government, who have kept Turkey under a state of emergency since the foiled coup, have lately claimed that the sanctions busting trial is the result of fabrications that stem from a Gulenist conspiracy to destabilise Turkey’s economy.
US prosecutors have overall charged nine people in connection with the alleged money laundering and sanctions busting but only Zarrab and Atilla have been arrested.