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Tag: halkbank

  • US Indicts Turkish Halkbank for Illegal Transfer of Billions of dollars to Iran

    US Indicts Turkish Halkbank for Illegal Transfer of Billions of dollars to Iran

     

    Halkbank, whose majority shareholder is the Turkish government, pleaded not guilty in New York on March 31, 2020, to criminal charges that it helped Iran illicitly transfer tens of billions in dollars and gold, wrote Aykan Erdemir and Philip Kowalski in an essay published on April 3 by the Foundation for Defense of Democracies, a policy institute based in Washington, D.C.

    On October 15, 2019, the Federal Southern District Court of New York accused Halkbank of “fraud, money-laundering and sanctions offenses,” alleging that Halkbank and its executives aided Iranian-Turkish gold trader Reza Zarrab in a “multi-billion dollar scheme to circumvent U.S. sanctions on Iran.”

    Initially, Halkbank refused to appear in court “claiming that the criminal charges are beyond the U.S. court’s jurisdiction,” Erdemir and Kowalski wrote. However, when “prosecutors proposed escalating contempt fines which could have totaled $1.8 billion after eight weeks,” the bank agreed to respond to the court charges.

    Originally, the Turkish and Iranian officials had concocted a scheme to exchange gas for gold to circumvent the U.S. sanctions, by claiming that the gold was headed not to Iranian government entities but to Iran’s “private sector.” Erdemir and Kowalski stated that “the scheme ultimately yielded the Iranian regime some $13 billion in Turkish gold between 2012 and 2013. Once the U.S. Congress introduced legislation to close the ‘golden loophole’ in 2013, Iran used Turkish front companies to issue invoices for fake transactions of food and medicine that fall under the humanitarian exception to U.S. sanctions. In one infamous case of over-invoicing, a Turkey-based luxury yacht company used Halkbank to sell nearly 5.2 tons of brown sugar to Iran’s Bank Pasargad at the price of approximately $240 per pound.”

    This scheme was first exposed in December 2013 by Turkish investigators who implicated then Prime-Minister Recep Tayyip Erdogan, several of his ministers and other senior officials, including Halkbank’s managers. Erdogan shut down the probe by firing the police officials, prosecutors and judges!

    The scandal resurfaced in March 2016 when Iranian-Turkish ring-leader Reza Zarrab was arrested in Miami after he flew to Florida to visit Disney World with his family.

    In March 2017, U.S. authorities arrested Halkbank Deputy CEO Mehmet Hakan Atilla upon his arrival in New York. Zarrab pleaded guilty and agreed to testify in court against Atilla. Zarrab confessed that he had bribed senior Turkish ministers and top Halkbank executives. He even implicated Erdogan in the corruption scheme, stating that Erdogan had personally approved the illegal actions.

    “Halkbank’s Atilla received a 32-month prison sentence in May 2018, a significantly shorter one than prosecutors had originally sought,” according to Erdemir and Kowalsky. “After Atilla’s return to Turkey, Erdogan rewarded the convicted sanctions buster by appointing him CEO of the Istanbul stock exchange, following the president’s established pattern of rewarding other senior accomplices of Zarrab with cushy appointments.”

    Erdogan personally appealed to Pres. Trump and other senior officials to block the court case of Halkbank, claiming that US courts have no right to try Turkish citizens. The Courthouse News Service reported that “One of Zarrab’s shell companies, Royal Holding A.S., listed its address as a 35th floor unit in Trump Towers Istanbul. Before pleading guilty to money laundering, sanctions evasions and bribery, Zarrab retained Trump’s personal attorney Rudy Giuliani to lead a campaign of shadow diplomacy that echoed the one in Ukraine. Shuttling between Turkey’s capital of Ankara and the White House, Giuliani met with Erdogan, Trump, former Secretary of State Rex Tillerson, and other senior U.S. and Turkish officials in an attempt to negotiate a prisoner swap. The New York Times reported that Tillerson resisted the White House pressure for a deal that would have effectively killed the Zarrab case.”

    Erdogan’s and Giuliani’s efforts succeeded in stalling the prosecution for almost two years, but ultimately failed when the U.S. Attorney’s Office for the Southern District of New York went forward with the charges last October.”

    Senator Ron Wyden, the Senate Finance Committee’s top Democrat, told Courthouse News Service: “It sure looked like Donald Trump was doing the bidding of Erdogan and Giuliani, and there were real questions about whether this was about getting Halkbank off the hook, even though there were allegations that they were orchestrating the largest sanctions evasion scheme in history.”

    During Pres. Trump’s Senate impeachment inquiry earlier in 2020, Senators Wyden, Robert Menendez and Sherrod Brown asked a joint question which was read aloud in the Senate by Chief Justice John Roberts: “Has the president engaged in a pattern of conduct in which he places his personal and political interests on top of the national security interests of the United States?”

    Wyden told Courthouse News Service: “Donald Trump has significant financial interest in Turkey,” referring to Trump Towers Istanbul. “We read regularly that his family has forged personal relationships with important Turkish officials. And so, you have to ask — which is what is part of our inquiry — whether the Trump policy toward Turkey is in a significant way colored by his personal and political interests and not the national security of the country.”

    If Halkbank is found guilty of violating U.S. sanctions, the court could impose a hefty penalty, regardless of the wishes of Pres. Trump.

  • Exclusive: Halkbank to handle Iran payments so long as legal

    Exclusive: Halkbank to handle Iran payments so long as legal

    By Jonathon Burch and Ebru Tuncay

    ANKARA | Thu Jan 26, 2012 8:36am EST

    (Reuters) – Turkish lender Halkbank will continue to handle customers’ oil payments to Iran as long as they comply with international regulations, the bank’s general manager said in the wake of fresh, unilateral U.S. and EU sanctions.

    Halkbank’s dealings with Iran drew attention last year when Indian refiners disclosed they were channeling oil payments through the Turkish bank as their own central bank had shut its payment facility, fearing U.S. retribution.

    Majority state-owned Halkbank is Turkey’s sixth largest bank, based on unconsolidated assets, and has a representative office in Tehran.

    It also processes payments to Iran by Tupras, Turkey’s sole refiner and a unit of Koc Holding, the country’s largest conglomerate, according to energy sector officials.

    General Manager Suleyman Aslan denied there had been U.S. pressure to stop handling transactions, as the bank was not acting illegally. He said a decision to reject an application from another Indian refiner late last year was unrelated to its trade deals with Iran.

    In an interview with Reuters Aslan said “communication channels” with all sides, including the United States, were open and that apart from India, the bank was not handling payments to Iran from any other third country.

    He said decisions on whether to take business were based on banking rather than political criteria.

    “We do not make any specific decision based on Iran or any other country. We have customers, and these customers approach us and we look at their transactions. This transaction may be in India, it may be in Iran it may be in another country,” he said.

    “If it is legitimate business, we will carry out the job within the framework of international regulations and international standard practice.”

    On December 31, President Barack Obama signed into law a fresh set of sanctions targeting financial institutions that deal with Iran’s central bank to stem the flow of oil revenue and persuade Tehran to abandon a suspected nuclear weapons program.

    The European Union followed with a ban on Iranian oil this week that is expected to take full effect within six months.

    Heavily dependent on imports of oil and gas from its eastern neighbor, Muslim NATO member Turkey opposed the imposition of U.N. sanctions on the Islamic Republic in 2010 but says it is abiding by those measures.

    However, Turkish officials have repeatedly said there is no obligation for Turkey to enforce tougher unilateral sanctions subsequently announced by the United States and European Union.

    “If after today processing these transactions brings about problems or becomes unlawful, we will not process them, however, according to the information that we are receiving now, these transactions are not unlawful,” Aslan said.

    “Therefore, if our customers want to continue – they can.”

    India, according to a government official in New Delhi this week, has agreed with Iran to settle part of their annual $12 billion oil trade in rupees.

    And one refiner, Hindustan Petroleum Corp has agreed to double its imports from Saudi Arabia from April, in a move that could replace purchases of Iranian crude.

    “TRANSPARENT”

    Indian state-run refiners began using Halkbank to pay Iran for imported oil in July.

    In December, however, Halkbank, which is 75 percent state-owned, declined to open an account for an additional Indian refiner, Bharat Petroleum Corp BPCL, fuelling speculation the lender may be planning to stop payments to Iran.

    However, Aslan said the decision to refuse BPCL was because it was unable to provide a satisfactory reference to Halkbank and was unrelated to concerns over doing more business with Iran.

    Asked if Halkbank would consider dealing with BPCL in the future, Aslan said even with the necessary reference the bank “may still not” handle payments from the refiner and that “this will depend on the situation at the time.”

    U.S. Treasury officials have visited Turkey several times to advise banks dealing with proscribed Iranian entities that they risked being frozen out of the U.S. financial system.

    Asked if U.S. officials had met directly with Halkbank, Aslan said: “We have had meetings in the past,” but he denied the bank had come under any pressure.

    “We are pursuing this matter in a transparent way because we are not doing anything illegal, we are handling this matter in a very open way by talking to all sides. All our communication channels are open.”

    This month a Turkish energy ministry official confirmed Turkey would seek a U.S. waiver for Tupras, a major customer for Iranian oil.

    Obama could grant waivers to institutions in countries that significantly reduce dealings with Iran.

    Tupras, according to industry sources familiar with the company’s strategy, is seeking to buy more oil from Saudi Arabia to reduce dependence on Iran for supplies.

    Turkey imports over 200,000 barrels per day, around 30 percent of its consumption, from Iran.

    On a visit to Ankara this month, Iran’s foreign minister projected annual trade with Turkey doubling in the coming four years to reach $30 billion in 2015, while Turkey’s urbanization minister said the two countries were planning important steps to ease money transfer processes.

    (Writing by Jonathon Burch; Editing by Simon Cameron-Moore)

    via Exclusive: Halkbank to handle Iran payments so long as legal | Reuters.