The FINANCIAL — Turkish President Recep Tayyip Erdogan was among the targets of an investigation in Turkey into suspected bribery and money laundering in connection with a scheme to help Iran evade sanctions, a former Istanbul police officer has testified.
The officer, Huseyin Korkmaz, told a New York court on December 11 that the Turkish investigation that he led in 2012-2013 initially focused on Turkish-Iranian businessman Reza Zarrab, who U.S. prosecutors have said was the mastermind behind the Iran sanctions evasion scheme, but later grew to include dozens of others.
He called Erdogan the “No. 1” target in a group that also included former Economy Minister Mehmet Zafer Caglayan and Suleyman Aslan, the ex-CEO of state-owned Halkbank, which he said was at the center of the scheme, according to RFE/RL.
Korkmaz — a witness in the trial of Halkbank executive Mehmet Hakan Atilla, who is charged with participation in the Iran sanctions evasion scheme — testified that Erdogan ultimately killed the case by firing and jailing the prosecutors and judges who pursued it.
As the lead investigator in the Turkish case, Korkmaz said he was reassigned and ultimately jailed. He said that after his release, he fled the country and took with him a cache of the investigative materials that he eventually turned over to U.S. authorities, who are now using the evidence in their case against Atilla.
If accurate, Korkmaz’s testimony confirms for the first time that the corruption case in Turkey was aimed directly at Erdogan — not just his ministers, associates, and family members.
Erdogan reacted angrily when the U.S. prosecutors opened their own case. Erdogan personally lobbied for the release of Zarrab and Atilla at the White House and has heatedly denounced U.S. prosecutors’ decision to pursue the case.
In shutting down the Turkish investigation in 2013, Erdogan called it a coup plot that sought to remove his government from power. He and his deputies have described the U.S. case in much the same way in recent weeks.
The Turkish investigation ended after Zarrab’s December 2013 arrest in Turkey and a raid on Aslan’s home, where authorities said they found millions of dollars stuffed into shoe boxes. Photos of the cash recovered from the raid were shown to the jury in New York.
As the United States ratcheted up financial sanctions on Iran over its nuclear and missile programs, Tehran was increasingly unable to access billions of dollars piling up in overseas banks from oil sales to foreign countries.
U.S. prosecutors allege that Zarrab, with the aid of Turkish officials and bank executives, ran a laundering scheme to get around the sanctions and use Iran’s money to make international payments on its behalf, including $1 billion that flowed through New York banks in violation of U.S. sanctions.
Zarrab pleaded guilty shortly before the U.S. trial and spent seven days on the witness stand testifying against Halkbank executive Atilla, who is charged as Zarrab’s co-conspirator but is now the lone defendant in the U.S. case. He has pleaded not guilty.
Nine people in all have been indicted, including Aslan and Caglayan, who have denied the charges. All but Atilla and Zarrab have avoided U.S. arrest. Erdogan has never been charged.
In testimony last week, Zarrab said he was told that Erdogan personally ordered that two Turkish banks be cut in on the alleged laundering scheme, and that Erdogan ordered the resumption of the alleged sanctions-evasion scheme after his government quashed the investigation.
Erdogan was prime minister until late August 2014, when he became president.
Much of Korkmaz’s testimony on December 11 focused on how the 2013 Turkish investigation targeting Zarrab and Erdogan, among others, was shut down and bribery payments were made to keep the sanctions evasion scheme going.
Witnesses have said that the laundering scheme first employed gold trading as a means of getting Iran’s money out of Halkbank, then turned to disguising the flows as humanitarian food shipments after revised sanctions rules banned the gold trade.
Korkmaz said he was jailed for more than a year after Erdogan’s government fired the Turkish investigators. He was released on bail in February 2016.
Fearing for his safety, Korkmaz said, he hired a smuggler in August 2016 to help him flee Turkey. Afraid he’d be tortured if caught and sent back home, he said he went through two countries before he obtained a new passport under a false name.
Korkmaz said he ultimately came to the United States with the help of U.S. law enforcement officials. At the airport, he said, he gave authorities a trove of materials he had taken, including audio recordings, photographs, statements, and documents.
Korkmaz said he took the evidence out of Turkey because he believed it would have been destroyed there.
With reporting by Bloomberg, Newsday, and Reuters