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Gold Trader Reza Zarrab Agrees To Cooperate With U.S. In Sanctions Evasion Case

Nov 29, 2017
Originally published on November 29, 2017 4:10 pm
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ROBERT SIEGEL, HOST:

A trial underway in Manhattan is being closely watched in Washington and in Ankara. It's already affected relations between the U.S. and Turkey. Turkish bankers and gold traders stand accused of a conspiracy to evade U.S. sanctions on Iran. The scheme was purportedly worth hundreds of millions of dollars. NPR's Ryan Lucas has been following this case, and he's here to tell us more about it. And first, Ryan, explain what this trial in New York is all about.

RYAN LUCAS, BYLINE: Well, the indictment charges nine people with carrying out this complex scheme to evade U.S. sanctions on Iran. It alleges that high-ranking officials in Iran and Turkey took part in the plot and shielded it from the authorities, and in return, they received bribes worth tens of millions of dollars. Now, some of the transactions passed through the American financial system, which is why this trial is in the U.S. Those facing charges include a former Turkish minister of the economy, several high-level Turkish bankers, as well as a Turkish-Iranian gold trader by the name of Reza Zarrab. And it's around this man, Zarrab, that much of the drama and the international intrigue kind of revolves. He's one of only two people to be in U.S. custody in the case. The other is a man by the name of Mehmet Hakan Atilla. He's a former senior official at the state-owned Turkish bank allegedly involved in the scheme, and he is the sole defendant standing trial. He has pleaded not guilty.

SIEGEL: But back to Zarrab. What's happened to him?

LUCAS: Well, he's been in U.S. custody since 2016. And he had been fighting the charges. But in September, his lawyers stopped appearing at pretrial court proceedings, and that fueled speculation that Zarrab had flipped and was cooperating with the government. In federal court in New York yesterday, prosecutors confirmed that that was indeed the case. Zarrab had pleaded guilty, and he would be a key witness in the case against Atilla.

SIEGEL: And what's he saying?

LUCAS: Well, today Zarrab took the stand for the first time, and he testified, and he reportedly told jurors that he had indeed conspired to help Iran evade U.S. sanctions. He implicated his former co-defendant now, Atilla. And he also said that he had bribed the then Turkish economy minister for help with this sanctions evasion scheme. And in total, he said, that those bribes were around $50 million.

SIEGEL: Around $50 million. That angle certainly has to contribute to at least some of the Turkish government's concern about this case. Is that why the case has been such an irritant in U.S.-Turkish relations?

LUCAS: In part, yes. Turkish government officials, including the president, Erdogan, have reportedly raised this case in meetings with their American counterparts over the past several months. But the case has gone forward anyways, much to Ankara's chagrin. Turkey's deputy prime minister - to give you a sense of how this is viewed in Turkey - has accused the U.S. of holding Zarrab hostage and forcing him to testify against Turkey.

But this also ties back into what may be the biggest irritant in U.S.-Turkish ties at this point in time, and that's the Turkish cleric Fethullah Gulen, who lives in self-imposed exile in the Poconos in Pennsylvania. The Turkish government accuses him of orchestrating the failed coup in Turkey, and Erdogan's government has tried to link this case to Gulen in an effort to discredit the prosecution and possibly, you know, protect his administration from possible corruption links at home.

SIEGEL: So what happens now, Ryan?

LUCAS: Well, Zarrab's testimony began today, and it may last several more days. Prosecutors say the government's case is going to take a couple of weeks. But the big thing to remember here is that this is a case that could have ramifications for U.S.-Turkish relations. Zarrab is a well-known businessman in Turkey. He has ties across the spectrum there, and the concern in Turkish political circles is that he could expose corruption that reaches to the very highest levels of the Turkish government, which is of course a key U.S. ally.

SIEGEL: NPR's Ryan Lucas, thanks.

LUCAS: Thank you. Transcript provided by NPR, Copyright NPR.