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The second hearing of the trial of Halkbank Deputy General Director Mehmet Hakan Atilla, in which business person Reza Zarrab has been testifying, was held yesterday (November 30) in Federal District Court in Manhattan at 5:40 p.m. Turkish local time. Atilla is charged with evading US sanctions on Iran.
The statements were shared from the courthouse by Daily Beast reporter Katie Zavadski.
Overheard in the press room - a reporter says of Zarrab's new wardrobe: "He cleans up nice!"— Adam Klasfeld (@KlasfeldReports) 30 Kasım 2017
“I attended the meeting as well”
Zarrab’s second-day testimony began as follows:
Zarrab: Many meetings were held between [then Minister of Economy] Zafer Çağlayan and Iranian figures, I attended them as well.
“As I mentioned before, officials from the NICU and NIOC came from Iran. The Iranian minister of oil didn’t attend this meeting.
Prosecutor: Who was in those meetings from Halkbank?
Zarrab: Süleyman Aslan and Mehmet Atilla.
“I used the emergency lane to catch the meeting”
Zarrab: “I asked for permission from İstanbul Traffic Bureau Directorate to catch the meeting”.
“I’ve gone under FBI protection because of the threats I received in prison”
Observing the hearing, Law 360 reporter Pete Brush said that Reza Zarrab said that he was threatened in the prison in Manhattan.
Prosecutor: Why have you been taken under FBI protection?
Zarrab: I’ve gone under FBI protection because of the threats I received in prison
“Aslan wanted to ensure his future”
According to Pete Brush, Reza Zarrab said that then Halkbank General Director Süleyman Aslan was feeling uneasy about the risk he took. “He wanted to ensure his future somehow”, Zarrab said.
Reza Zarrab says that after the plan was devised Halkbank boss Suleyman Aslan complained he was taking on all the "risk" and asked for payment. "He wanted to ensure his future in some way." Zarrab says he then turned to minister Mehmet Zafer Caglayan for permission to pay Aslan https://t.co/nXTqRwgdgv— Pete Brush (@PeteBrush) 30 Kasım 2017
Zarrab also said that he asked for Çağlayan’s permission to bribe Süleyman Aslan.
Katie Zavadksi reported that Zarrab continued, saying: “Aslan was receiving a lot of warnings. Especially the United States (US) frequently voiced its concerns about him by-passing the sanctions on Iran”.
He explained the reason why he bribed Süleyman Aslan with the following words: “Bribing Aslan was more important than bribing Zafer Çağlayan because it was Aslan who controlled everything”.
Zarrab: “Erdoğan and Babacan gave the order”
Zavadski reported on Twitter:
Zarrab: Prime Minister Erdoğan and [then Minister of Economy Ali] Babacan personally ordered Vakıfbank and Ziraat Bankası to help with transactions (gold trade) with Iran.
Reza Zarrab said that Erdogan and Babacan personally instructed two other Turkish banks, Ziraat and Viqaf, to help Zarrab do the Iranian transactions.— Katie Zavadski (@katiezavadski) 30 Kasım 2017
Zarrab noted that he learned about this instruction from then Minister of Economy Çağlayan.
Fuller Zarrab quote: "What I’m saying is that the prime minister at that time period Recep Tayyip Erdogan and minister of the treasury ... had given orders to start doing this trade."— Adam Klasfeld (@KlasfeldReports) 30 Kasım 2017
Why was TL used?
Zarrab gave more details on money transfers which he talked about on the first day:
“If we’d sent the money in dollars, it would have had to go through the American banking system. If we’d sent it in Euro, it would have had to go through European banking system but in TL, it was staying in Turkey and didn’t draw any attention”.
CourthouseNews reporter Adam Klasfeld conveyed the part where Zarrab explained the money transfer as follows:
“Money was coming to the accounts in Halkbank from India. Halkbank was converting this into TL and it was transferring it to Arap Türk Bankası as TL. Thus, it wasn’t going through an international institution”.
The prosecutor asked “why was it necessary to send the money from bank to bank?”
Zarrab: “It was necessary to hide the source of the money by adding an additional bank. Then it was being converted to gold for trade”.
“I didn’t bribe Atilla”
In response to a question whether he bribed Hakan Atilla, Zarrab said, “Definitely not, I didn’t. I was bribing Turkish Minister of Economy. There was no need to make payment to somebody else” and added “Besides, Atilla didn’t ask for bribery”.
“We tried in China but banks kicked me out of the market”
The question “Did you try the system you practiced in Halkbank in another country?” was posed to Zarrab. Zarrab said, “Yes” and in response to the question “Which country?”, Zarrab replied “China”.
Zarrab: Yes sir but banks kicked me out of the Chinese market as they found out that I was doing business with Iran.
Prosecutor: How long has it been since this was established?
Zarrab: A few months.
How did Zarrab's system work?
Zarrab said facilitating a payment for Iran requires a minimum of 10 transactions. He called Halkbank the heart.
Here are the 10 transactions:
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 isn’t actually involved in 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 transfers the payment to 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, it is used to pay for Iran's international debts.
Trial of Rıza Zarrab
Reza Zarrab was arrested on December 21 as a part of the December 17-25 corruption and bribery investigation. He was released after 70 days of imprisonment.
Iranian businessperson Babek Zencani, who was indicated to be Zarrab's partner in Iran, was sentenced to capital punishment on the 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 to 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 was frequently associated with Rıza Zarrab in this period. In the report prepared by inspectors of the Ministry of Customs and Trade, a relation between the two was mentioned.
Zarrab had been taken into custody in the Miami city airport while trying to enter the United States and was 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.
*Source: Twitter, BBC Türkçe
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