Business person Reza Zarrab has appeared before jury in the case in Federal District Court in Manhattan in which then Deputy General Director Halkbank, which is a largely state-owned bank, Mehmet Hakan Atilla has been tried. Atilla is charged with evading US sanctions on Iran.
Zarrab said that he was born in Iran, has been living in Turkey since 1.5 years old, lived two years in Dubai and is a citizen of Turkey, FYRON (Macedonia) and Iran.
In 2015, Reza Zarrab was granted an export award in Turkey in a ceremony attended by President Recep Tayyip Erdoğan.
Zarrab received his award from the hands of then- Vice Prime Minister Numan Kurtulmuş, then-Minister of Economy Nihat Zeybekçi and Exporters Assembly of Turkey Chair Mehmet Büyükekşi.
He explained that he is still in FBI custody and doesn’t stay in a hotel.
Pleading guilty and cooperation with the prosecution, Zarrab said “Cooperation was the fastest way to accept responsibility and to get out of jail at once”.
Zarrab came to the witness stand in jail clothes handcuffed at 6:40 p.m. in Turkey local time.
Then Minister of EU Bağış was mentioned
According to Reuters, Zarrab said that then Minister of the European Union (EU) Egemen Bağış helped him open an account at Aktif Bank.
Zarrab explained Bağış’s position in money transfer as follows:
Zarrab: “I tried to open an account in Aktif Bank. My initial attempt failed.”
Zarrab: “In my initial attempt, Aktif Bank told me that the customers who will do business with Iran need to have a special permission to open an account”.
Zarrab: “Aktif Bank was working directly with Iran. They disintermediated me”.
Prosecutor: “Was the major part of your income coming from Aktif Bank?”
Zarrab added that then-Minister of EU Egemen Bağış helped with arranging this meeting.
Then Minister of Economy Çağlayan was mentioned
Then-Minister of Economy Zafer Çağlayan was also mentioned in the case.
Zarrab said that he asked for Zafer Çağlayan’s help when he had troubles with the banks.
Stating that Halkbank General Director Süleyman Aslan didn’t want to work with him in gold trade, Zarrab said that he then went to then-Minister of Economy Zafer Çağlayan.
Question: “Why did you go to Zafer Çağlayan after Aslan turned you down?”
Answer: “Because he was the minister of economy of Turkey”.
“I paid Çağlayan 45-50 million Euros in bribe”
Zarrab explained the relation with Çağlayan after he sought his help and said that he bribed Zafer Çağlayan to be able to work with Halkbank.
“I believe I paid Çağlayan 45-50 million Euros in bribe”.
Zarrab noted that this figure is just the one paid in euros and doesn’t involve the other payments he made to Çağlayan.
He also added that Çağlayan wanted to have half of the share of profits in trade with Iran.
Question: In what valuables did Çağlayan receive this paymen?
Answer: In cash, valuable articles and banks transfer.
Question: Was this payment made to Çağlayan’s family as well?
Bank receipt of the payment made to Çağlayan
The prosecutor wanted to present the bank receipt of 2.4 million TL (520 thousand Euros) allegedly paid to Çağlayan’s brother as his share of the profit made through the trade with Iran. Judge Berman allowed the document to be presented despite the defense’s objection.
The document was then included in the case file.
He explained the system by drawing a diagram
After the recess, Zarrab explained how the gold trade works by drawing diagrams.
Daily Beast correspondent Katie Zavadski explained Zarrab's testimony as follows:
"The transaction would primarily begin with Iran selling crude oil and gas to Turkey.
The National Iran Oil Company (NIOC) would make the sale of oil to TÜPRAŞ (Turkish Petroleum Refineries Corporation), and gas to BOTAŞ (Petroleum Pipeline Cooperation). They would owe money to NIOC.
"TÜPRAŞ, BOTAŞ, and NIOC have accounts at Halkbank.
"By moving this money around within Halkbank, we're getting this close to a point where it could leave Halkbank. In fact, one of the methods that was designed is this, bc NIOC would not be able to do this directly.
"These couriers would physically transport the gold to Dubai. But from the customs document that's made in Turkey, the document would show the final destination is Iran, transiting through Dubai.
“The gold would never go to Iran.
"Now we would be at a point where this gold would be sold, and would be converted back into cash.
“Halkbank chief told him for a while Turkish regulations said they had to put Iran as final gold destination”, Pointing finger at Atilla.
“This whole scheme is designed to get Iranian money that's stuck in Halkbank out into the general sphere, so it can be used to pay off debts around the world.
The trial will continue with Zarrab’s testimony today (November 30).
How does Zarrab's system work?
Zarrab said facilitating a payment for Iran requires a minimum of 10 transactions. He called Halkbank the heart.
1- The NIOC sells oil to TÜPRAŞ and natural gas to BOTAŞ.
2- The company called Sermaye Exchange (Capital Exchange) established in Iran opens an account in Halkbank. The company actually doesn't do trade. It is used for money transfer.
3- NIOC transfers the payment it receives from the TÜPRAŞ and BOTAŞ to Zarrab's company.
4- Sermaye Exchange transfer the payment to the Zarrab's company.
5- Zarrab's company's account is also in Halkbank. The transfer occurs between the two accounts in Halkbank.
6- Zarrab converts the money coming to his account in Halkbank to different currencies (euro, dollar, lira) and transfers it to his other account in Denizbank.
7- The account in Halkbank is cleansed that way.
8- Zarrab purchases gold with the money in Denizbank through Royal Group, which he established in Turkey and made gold trade.
9- Gold is moved to Dubai via couriers. Gold is converted to Dirham in Dubai.
10- Since money never enters Iran,
Trial of Rıza Zarrab
Rıza Zarrab was arrested on December 21 within the scope of December 17-25 corruption and bribery investigation. He was released after 70 days of imprisonment.
Iranian businessperson Babek Zencani, pointed as Zarrab's partner in Iran was sentenced to capital punishment on charge of corruption on March 6, 2016.
Zencani has companies in Turkey too. Kont Group Cosmetics in Beşiktaş district of İstanbul is one of them. Zencani is also allegedly linked with Onur Air. Zencani's attorneys in the past few days had stated in the lawsuit they brought in İstanbul that Onur Air belongs to them.
Zencani is associated with Reza Zarrab frequently during this period. In the report prepared by inspectors of the Ministry of Customs and Trade, a relation between the two has been mentioned.
Zarrab had been taken into custody in Miami city airport while trying to enter the United States and arrested on March 22.
On his first hearing on April 27, Zarrab facing up to 95 years of imprisonment denied the accusations of conspiring to evade US sanctions against Iran, money laundering and bank fraud.
On October 26, Zarrab pleaded guilty and it was announced by the state attorney's office on November 28.
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