Reza Zarrab’s sixth day on the stand was not a good one for the Turkish-Iranian gold trader, who is the star witness in a federal trial over an alleged multi-billion dollar oil-for-gold scheme that violated U.S. sanctions against Iran.
Zarrab, 34, pleaded guilty last week in Federal District Court in Manhattan to conspiring to evade U.S. sanctions on Iran and agreed to cooperate with the prosecution, giving the “inside story” behind the conspiracy, Assistant U.S. Attorney David Denton announced at the start of the case.
But on Wednesday, he faced a rigorous cross-examination by lawyers representing his former co-defendant, Mehmet Hakan Attila, 47, who is pleading not guilty and facing his own trial after Zarrab’s plea bargain with the government.
The government alleges that Attila, a deputy CEO at Turkiye Halk Bankasi AS, known as Halkbank, and his boss Suleyman Aslan used the state-owned bank to help Zarrab smuggle gold and U.S. currency to the Iranian government and other Iranian entities in exchange for Iranian oil money from 2010 to 2015.
Attila’s defense attorney Cathy Fleming displayed transcripts and played audio from a series of recorded phone conversations between Zarrab and others that took place between April 10-11, 2013. With each phone conversation, Zarrab’s involvement in the scheme seemed to grow and Attila’s culpability seemed to shrink.
For instance, on April 10, 2013, Zarrab had a phone conversation with Abdullah Happani, 42, a Turkish citizen, complaining that “Hakan Attila threw a wrench in the gears” in their complex scheme to supply gold and currency to the Iranian government and other entities in exchange for Iranian oil money.
According to information in the calls, some of the Iranian oil money proceeds were disguised as food sales. In another call on April 10 with Hakan Aydogan, the senior manager at Halkbank, Zarrab was recorded saying, “Our Minister of Economy made the request, he called me in, and asked me to broker Iran’s food transactions; in other words, for me to do the transactions rather than foreign companies, even if it’s just transit.” This phone call appears to paint Zarab as the decision maker in the scheme. He testified last week that he paid tens of millions of dollars’ worth of bribes to Zafer Caglayan, the former economic minister alluded to in the phone call.
On April 11, 2013, in a phone call between Zarrab and another Halbank employee, Zarrab says, “Yes, food. For now it’s food. Later on, pharmaceuticals will also be added.” This appeared to imply that Zarrab intended not only to continue running the scheme but planned to upgrade it to include pharmaceuticals.
Overall, Fleming fought back hard Wednesday in her cross-examination of Zarrab through a Turkish translator in a case that has received international attention. The fact that Zarrab’s memory failed him at crucial points in Fleming’s cross-examination did not appear to help Zarrab’s credibility.
“The strategy is to win,” said Victor Rocco, another of Attila’s defense attorneys. “That’s always the strategy of the defense attorney.”
The defense attorneys geared the discussion towards showing the marginal role Attila played in the complex scheme. Zarrab’s April 2013 phone calls were used as evidence that Zarrab consulted with Attila’s superiors at the bank about the details of the scheme but not with Attila, that Zarrab didn’t personally inform Attila of changes in the scheme such as the switch from directly smuggling gold to smuggling fake food shipments and that Zarab didn’t even have Attila’s phone number listed in his contacts.
On Monday it was revealed in court that Zarrab was recorded saying in a 2016 jailhouse conversation that to get a plea deal, you need to lie “in America in order to make it out of prison,” according to a summary of the conversation in a public court filing. He also asked an associate to meet with fortune tellers to find out if his cooperation with prosecutors would hold him in good stead, according to Turkish media reports. Then Tuesday, Zarrab testified that he had made “maybe $150 million” from the scheme and also revealed in an unrelated charge that he had paid around $45,000 to a prison guard at the Metropolitan Correctional Center, where he was being held, in order to get alcohol and use a cellphone. He said the bribe was arranged through one of his Turkish lawyers who was in New York at the time.
Far from U.S. District Judge Richard Berman’s courtroom, tension is rising in Turkey, as Turkish President Recep Tayyip Erdogan continues to use the trial to instigate anti-American sentiment in the country, alleging that the trial is a political setup designed to topple the Turkish government after the July 2016 coup attempt. The Turkish government believes Islamic cleric Fethullah Gulen and his supporters instigated the coup. Gulen has lived in Pennsylvania in self-imposed exile since 1999. The U.S.’s refusal to extradite him without more evidence from the Turkish government has been a sore point in relations between Ankara and Washington.
The most dramatic moment in the trial was Zarrab’s Nov. 30 testimony that in 2012, when Erdogan was prime minister, he personally authorized the participation of two Turkish banks in the scheme to evade U.S. sanctions against Iran. However, not everyone found Zarrab’s testimony riveting. Last Friday Dec. 1, Judge Berman said he would be dismissing one of the jurors who had fallen asleep during Zarrab’s testimony. Ironically, when the juror was asked during jury selection what he likes doing in his spare time, he had responded with “sleep,” according to Berman.
Even Judge Berman, who is presiding over the case, has not been spared the Turkish government’s wrath. Earlier Wednesday, Erdogan’s spokesman accused Berman of participating in events organized by Gulen, implying that Berman’s court is biased. “The issue has gone beyond a legal case,” said Erdogan’s spokesman Ibrahim Kalin. “It is known that the judge has participated in events upon Gulen’s invitation.” At the initial hearing of the case, Berman said he was one of five legal experts speaking at a legal symposium in Istanbul in 2014 that was organized by Gulen supporters.
According to TurkishMinute.com, Erdogan’s Justice and Development Party deputy Aydin Unal threatened exiled Turkish journalists because of their coverage of the Zarrab trial. In a column written for the pro-Erdogan newspaper, Yeni Safak, Unal said, “Better to get ready for intra-organization extrajudicial killings instead of carrying out operations over judicial theater.” He then named nine targeted journalists.
According to Zarrab’s newly released plea agreement, he has said he will make restitution in an amount to be specified by the court and at his request, prosecutors will consider submitting a U.S. witness protection program application for him and his family.
