Turkey’s president, Recep Tayyip Erdogan, personally approved a financial scheme aimed at skirting sanctions against Iran, a Manhattan federal jury was told on Thursday.
Reza Zarrab, a 34-year-old Turkish-Iranian gold dealer behind the sanctions-busting conspiracy, testified that Erdogan and other top Turkish government officials personally approved trade with Iran that violated U.S. and United Nations sanctions against the Islamic regime.
“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,” Zarrab testified, according to reporters who attended the federal trial.
Fuller Zarrab quote: "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."
— Adam Klasfeld (@KlasfeldReports) November 30, 2017
The case could have significant implications for relations between the U.S. and Turkey, two longtime Nato allies.
Zarrab, who was once a confidante of Erdogan’s, recently accepted a plea deal with U.S. prosecutors in exchange for his testimony. He is currently testifying as a witness against Mehmet Hakan Atilla, a top executive at Halkbank, a state-run bank that took part in the Iran trade.
Zarrab’s scheme, which transpired in 2012 and 2013, involved masking purchases of Iranian oil — which were subject to sanctions — as gold purchases. Zarrab says he conspired with Turkish government and banking officials to pull off the multi-billion dollar scheme, paying out tens of millions of dollars worth of bribes to bank officials.
In his testimony, Zarrab also said that Erdogan and Ali Babacan, the deputy prime minister at the time, instructed two Turkish banks, Ziraat and Viqaf, to accommodate Zarrab’s transactions with Iran.
Zarrab also implicated former Turkish minister of economic affairs Zafer Caglayan.
“At the end of the day we did not hide anything from Zafer Caglayan, we did everything within his knowledge,” Zarrab testified.
Caglayan has also been indicted in the case, but he remains in Turkey, out of U.S. prosecutors’ reach.
Erdogan and other Turkish government officials have scrambled to soften the anticipated blowback from Zarrab’s testimony. They have accused the U.S. government of attempting to undermine Turkey. Government officials and pro-government media outlets have accused the prosecutors handling the case of being agents of Erdogan’s political enemies.