Former Turkish Minister, Zafer Caglayan, Charged With Evading US Sanctions

The U.S. has charged former Turkish economy minister Zafer Caglayan, along with three other individuals, with conspiring to use the U.S. financial system to conduct hundreds of millions of dollars’ worth of transactions on behalf of the Iranian government and other Iranian entities.

Along with Mr. Caglayan, U.S. Attorney’s Office at Southern District of New York also indicted Suleyman Aslan, General Manager of Turkish state-run bank Halkbank, the bank’s assistant deputy manager of international banking Levent Balkan and Abdullah Happani, an employee of Iranian gold trader Reza Zarrab. 

Mr. Zarrab has been in a federal prison in Manhattan since March last year.

The individuals were also charged with lying to U.S. government officials about illegal transactions; laundering funds in connection with those illegal transactions, including millions of dollars in bribe payments to Mr. Caglayan, Mr. Aslan, and others used to facilitate the scheme; and defrauding several financial institutions by concealing the true nature of these transactions.

The case is assigned to United States District Judge Richard M. Berman.

The indictment also alleges that Mr. Zarrab, Halkbank’s deputy manager for international banking Hakan Atilla, Mohammad Zarrab, Camelia Jamshidy and Hossein Najafzadeh participated in the same overarching scheme to violate and evade prohibitions against Iran’s access to the U.S. financial system.

Only Mr. Zarrab and Mr. Atilla are in U.S. prison.

Mr. Aslan, Mr. Zarrab and a son of Mr. Caglayan were arrested by the Turkish police four years ago in a similar scheme, but all of them were released in several weeks. Turkish then-prime minister, Recep Tayyip Erdogan, framed their arrest as a plot against his government “with global links.”

Mr. Zarrab, who was arrested on March 19, 2016, and Mr. Atilla, who was arrested on March 27, 2017, are scheduled to begin trial on October 30.

According to the attorney’s office, the suspects used Turkish state-run bank Halkbank to engage in transactions that violated U.S. sanctions against Iran. The defendants used Halkbank to facilitate Mr. Zarrab’s ability to use his network of companies to supply currency and gold to the Iranian government and Iranian entities using Halkbank while concealing Halkbank’s role in the violation of U.S. sanctions from regulators.

Mr. Zarrab’s right-hand man, Mr. Happani, assisted him in operating the scheme through this network of companies. The indictment said Mr. Caglayan, who was serving as Turkey’s economy minister, received tens of millions of dollars’ worth of bribes in cash and jewelry from the proceeds of the scheme to provide services to the Iranian government and to conceal those services from U.S. government officials.

Using his position as the minister, Mr. Caglayan directed other members of the scheme, including officers of Halkbank, to engage in certain types of deceptive transactions, approved the steps taken by other members to implement the scheme, and protected the scheme from competitors as well as from scrutiny.

Erdogan Slams US Over Charges

In his initial reaction, President Erdogan said the criminal charges against the former economy minister are a step against the Turkish state and urged the U.S. to review the legal case that strained bilateral ties.

The president also highlighted the fact that Turkey had never complied with the international sanctions regime against Iran, and the U.S. knew the Turkish position then as well.

“For the moment, it is impossible to evaluate this within legal logic. I see this step against our former economy minister as a step against the Turkish republic,” Reuters quoted the Turkish president as saying on Friday.