Zarrab’s stage performance and lingering questions
I spent the whole week covering Turkish-Iranian gold-trader Reza Zarrab’s testimony at the U.S. District Court for the Southern District of New York.
Most days I was disconnected from online coverage of the proceedings. Unlike the court reporters, we were not allowed to take any communication gadgets into the building, which made real-time reporting very difficult. Although I initially thought the handicap gave an unfair head start to the American media, I later came to believe this disadvantage could actually be rather liberating, in terms of grasping the reality in the courtroom free from external influence.
Let me start with my impressions of Zarrab, or as put by Prosecutor David Denton, the "star witness" in the case against Mehmet Hakan Atilla, the deputy general manager of Turkey’s state-owned Halkbank. The street-smart 34 year-old appeared to be calm, confident, prepared and sharp. This probably had a relation to the kind of preparations undertaken with the FBI and prosecutors after he decided to cooperate with the U.S. government to expose his scheme to evade U.S. sanctions on Iran through first a gold trade scheme and then a fictitious food trade scheme via Halkbank.
How flawlessly he drew two separate diagrams on a white board in the courtroom to describe the steps used to withdraw Iran’s oil and gas money from Halkbank, and use that money to make international payments on behalf of Tehran, indicating that he had rehearsed this little act for many weeks with the prosecutors. If you asked me, I would say he had been cooperating with the U.S. government long before Oct. 26, the date he officially signed the cooperation agreement.
Training was certainly a factor in his courtroom performance. However, it could not have been so powerful without his natural talent for any kind of trade. Most of us watching him live in the courtroom could not help but think he was almost proud of himself for being the mastermind of such a scheme.
Our jaws dropped when he revealed he tried to adopt the method they used at Halkbank to allow Iran to trade with other countries such as China, India and Italy, though these latter countries all got cold feet. It appeared that he was a bigger fish than we thought for the U.S. law enforcement, as he sought to extend his evasion methods to include other countries.
I understand the frustration of Turkish people vis-à-vis Zarrab. He is a crook, and his court performance serves as a bitter reminder that the Turkish government made a huge mistake by underestimating him.
His allegations were shocking. He claimed former Turkish Economy Minister Zafer Çağlayan and former general manager of Halkbank, Süleyman Aslan, took bribes from him to run the sanction evasion scheme. However, his presentation of a possible link to then Prime Minister Recep Tayyip Erdoğan appeared vague at best.
Prosecutors submitted the transcript of a wiretapping of a phone call in October 2012 between Zarrab and a senior official at Arap-Türk Bank, Özgür Erker, in which Zarrab claimed he heard from Çağlayan that Erdoğan and then Treasury Minister Ali Babacan ordered two other Turkish banks, Vakıfbank and Ziraat Bank, to allow gold trade with Iran. Zarrab validated the authenticity of the content of the call. However, prosecutors did not follow up the call with further questions. Nor did they provide further material to consolidate suggestions that everything we heard at the courtroom happened with consent from the top.
This lack of clarity also caught the attention of Judge Richard Berman. “Claims that the prime minister and a minister were involved should not be made lightly. I believe we should go back, play that recording again and ask the witness if that is what the transcript says,” Berman suggested to the prosecutors, adding that this would add gravitas to the presentation.
The trial is set to continue for at least another two weeks. Zarrab will be cross-examined by Atilla’s lawyers and other witnesses will also appear in court. Thus we cannot say what will happen next. Judging, however, by the sheer volume of the accusations and previous jurisprudence, a likely outcome is Halkbank receiving large fines from the Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury.
An overview of the case presented by the U.S. prosecutors so far suggests a low possibility of further allegations implicating sitting Turkish government officials including Erdoğan. I might be wrong but I feel that on that front prosecutors have accomplished their goal of perception-building thanks to the international headlines.
Nevertheless, the U.S. public opinion is calling for another cooperative witness willing to divulge sensitive information about Turkey in the Mueller investigation. President Donald Trump’s former national security adviser Mike Flynn’s revelations on whether the Turkish government hired him to abduct Fethullah Gülen or to release Zarrab will be equally important to watch.