The world hasn’t forgotten Reza Zarrab, even if Turkey has

It was breaking news after Reza Zarrab was arrested in the United States and the indictment about him was immediately unsealed. 

Let’s look at what happened piece by piece: 

1) The charges against Zarrab in the U.S. are not the same (at least for now) as the charges against him in Turkey. Zarrab and two other defendants are charged with violating the U.S. embargo against Iran. There is no such crime in Turkey; thus this was not included in the charges against him in Turkey. 

2) Actually, the charges against Zarrab in Turkey were very serious but these charges were removed without any trial. Let us remember that the main charge was bribing cabinet ministers. 

3) The embargoes against Iran are being lifted one by one but they were in three categories at the time. The first category was made up of unilateral ones that the U.S. imposed. The second category was the ones introduced by the United Nations after Iran started its nuclear program. And last, the EU also imposed some unilateral embargoes. 

4) The embargoes other than the U.N.’s were not legally binding on third countries such as Turkey, but essentially, any person or company that violated U.S. embargoes would get into trouble, especially with the U.S. As a matter of fact, the U.S. has accused several Turkish citizens on similar charges; several Turkish companies have been blacklisted in the U.S. 

5) With an embargo imposed by the U.N., Iran was further restricted and the country was not able to collect the payments for the gas and oil it sold. Upon this, an account was opened in Turkey at Halkbank. Turkey started paying into this account for the oil and gas it bought from Iran. Control of the account belonged to Iran. 

6) Iran, wanting to buy products that were not covered by the embargo, authorized several people and companies, enabling them to draw money from the Halkbank account equivalent to their purchases, thus importing these goods. In a sense, what Iran bought and whether the goods violated the embargoes were Halkbank’s responsibility. In theory, if the goods to be bought were included in the embargo, Halkbank should not have permitted it.

7) For instance, exporting valuable materials such as gold to Iran was not included in the embargo until a certain time. Babek Zanjani’s special relationship with the then-president of Iran, Mahmoud Ahmadinejad, was disclosed during a trial, while his business partner in Turkey, Reza Zarrab, long bought gold from everywhere in the world with Iran’s money and physically sent it to Iran with a certain commission. A significant part of this trade was supervised by Halkbank.

8) This gold trade was in very huge figures – so much so that it even upset Turkey’s foreign trade statistics. Certain people claimed that due to this trade, Turkey’s balance of payments recovered but this was not true because the gold was neither Turkey’s nor the money that bought it. At most, it was the commission that bred from this trade that positively contributed to Turkey’s balance of payments. 

9) When the gold trade reached remarkable – actually astronomical – dimensions, selling gold to Iran was also included in the embargo. However, the organization that used Iran’s money and sent it to Iran, in a way, did not dissolve; this time the trade of things that were not included in the embargo, such as food and the like, commenced. However, we know from the Dec. 17, 2013, investigation file that it is highly probable that this trade was imaginary. For instance, let’s say there are claims that 100 tons of wheat were sold to Iran, but the capacity of the ship that carried those 100 tons was below this. Thus, either these people were stealing Iran’s money or were physically carrying money to Iran. 

10) According to a calculation, Zarrab was earning around a 15 percent commission in the trade he conducted in the name of Iran. In other words, Iran would buy a good or gold worth 85 kuruş and pay 1 lira for it while Zarrab received the 15 kuruş.  

11) In the infamous Dec. 17 file, it was claimed that Zarrab was distributing almost half of these 15 kuruş in Turkey as bribes. 

12) Now, we understand from the charges directed in the U.S. that Zarrab was not only drawing Iran’s money from Halkbank with Iran’s permission and then buying goods to send to this country, but he was acting as if he was a shadow Iranian bank. For other purchases of goods, he was making money transactions to Canadian, Chinese and Turkmen companies. It is still unclear how much of this money was given to Zarrab by Iran. 

13) What is debated now and what remains a subject of the utmost curiosity is whether or not the charges against Zarrab in the U.S. will also include the charges against Turkey. This depends on whether or not a Turkish bank is the source of this money Zarrab was trying to send to Canada, China and Turkmenistan – a piece of information that American prosecutor Preet Bharara, who has become a type of a folk hero in Turkey, is likely to find out.