Turkey Allegedly Had Role in Helping Iran Dodge Sanctions
by Jamie Dettmer July 22, 2015
More details are emerging about the role Turkey has allegedly been playing in assisting Iran to dodge international sanctions involving the trading of gold by an Iranian businessman that Turkey's president once dubbed a philanthropist.
Ministers and associates of the President Recep Tayyip Erdogan's family are alleged to have been paid off with substantial bribes amounting to at least 4 percent of the gold traded via Turkey, according to one of the couriers, who claims he helped facilitate the delivery of a ton of gold a day.
The disclosures by the courier, Adem Karahan, are complicating current political negotiations in Ankara over the formation of a coalition government.
Possible partners for Erdogan's Justice and Development Party (AKP), which lost its parliamentary majority in June elections, are demanding the retrial for four former government ministers linked to the scandal and for the re-launching of a graft investigation first started in 2013 involving the president's son Bilal and other family members.
Outlining the sanctions-busting operation in an interview with Cumhuriyet newspaper, Karahan, who worked for Iranian businessman Reza Zarrab, claims there were two groups of 22 couriers moving gold through Turkish airports.
He alleges they never encountered difficulties with customs officials who "knew what was going on."
"They welcomed us at the entrance of the airport. We used to show them the invoices and they added new seals on the gold boxes after doing the necessary checks,' Karahan claimed. 'They did not give us any problems as they were also receiving bribes. Zarrab personally paid them. I personally witnessed this.'
Zarrab is accused of being the ringleader of a money-laundering and gold-smuggling ring in Turkey established to circumvent international sanctions against Iran.
He and 20 other people - including the sons of three former ministers, a mayor and other high-profile political and business figures - were arrested as part of a corruption and bribery probe launched in December 2013.
By the end of the probe, which was closed down by the country's chief prosecutor last October, more than 50 suspects had been named.
In the wide-ranging corruption probe launched by the Turkish police and prosecutors in Adana and other towns, the first hint of an Iranian angle came when investigators uncovered a complicated oil-for-gold deal between Turkey and Iran.
The investigators said they didn't set out to uncover a sanction-busting oil deal but claim they were led to it when following a trail of suspected cash bribes.
Iranian businessman and gold dealer Zarrab, whom police accused of bribing the then-economic minister while organizing a variety of transactions for Iran, was arrested.
So, too, the CEO of the state-owned Turkish financial institution Halkbank, who was reportedly found to have more than $4 million in cash stuffed in shoe boxes in his home.
According to Turkish investigators, both men were at the center of a complex deal in which Iran sold oil and natural gas to Turkey for cash payments that were deposited in an account held at Halkbank.
In order to circumvent international money-transfer sanctions on Iran, the cash deposits were then allegedly converted into gold for export to Tehran, often via Dubai.
Police reports filed with Turkish prosecutors estimated that in three years alone, $8 billion in gold was transferred to Iran.
American analysts valued the trade much higher, arguing it amounted to $13 billion between March 2012 and July 2013 alone. But in his newspaper interview, Karahan appears to suggest the trade was worth more like $20 billion.
In July 2013, the U.S. and the European Union tightened sanctions loopholes by prohibiting gold exports to Iran.
The investigation was closed down amid AKP accusations that police and prosecutors were pursuing a witch-hunt and trying to mount a judicial coup.
The government later appointed new prosecutors and they eventually decided on non-prosecution last October.
On Tuesday lawmaker Ali Özgündüz, who served on a parliamentary corruption commission set up a year ago, alleged politicians implicated in the investigation received more than $2 billion in bribes – more than double the amount in bribes mentioned by Karahan in his newspaper interview.
A fellow lawmaker, Erdal Aksünger, also with the secular Republican People's Party (CHP), told the Bugün newspaper midweek that Karahan's allegations were omitted from the investigation file sent to the parliamentary corruption commission.
'Unlawfulness in the police'
Aksünger claimed the original police file was 504 pages long but was shortened to 309 pages before being sent to the commission.
"I was looking for unlawfulness in the police [probes]. … I realized [the probes] were based on legal grounds and was not a plot [against the government]," he said.
In a statement to the Istanbul bourse as the investigation unfolded last year, Halkbank insisted that all its business transactions with Iran had been transparent and legal. But it admitted it had exported gold to Tehran but ceased doing so the month before tighter international sanctions were introduced to block gold transfers to Iran.
The broad outlines of the oil-for-gold arrangements were known before the police probe was launched. In April 2013, 47 U.S. lawmakers called on U.S. Secretary of State John Kerry and Treasury Secretary Jack Lew to sanction Halkbank for its gold deals with Iran.
Politicians with the two largest opposition parties, CHP and the Nationalist Movement Party (MHP), are calling for the reopening of the corruption probe.
"The investigation must be reopened," said Oktay Vural, deputy chairman of the MHP's parliamentary group. "This will show whether Turkey is a country governed by the rule of law or not. It's not possible to cover up an issue with such international implications."
In a statement issued to the press, the chairman of the Adana Bar Association, Mengücek Gazi Çıtırık, said: "Taking Karahan's recent statement into consideration, we see that the corruption and money laundering acts were not restricted to just Turkey and that this issue also has some international aspects. Thus, the decision to drop the investigation, made by the Chief Public Prosecutor's Office despite the accumulated evidence, should be canceled and the investigation re-launched."
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