By Christian Berthelsen
Turkish president Recep Tayyip Erdogan was among the targets of a bribery and money laundering probe in that country related to illicit flows of Iranian oil proceeds, a former Istanbul police officer testified in New York.
The officer, Huseyin Korkmaz, said the investigation initially focused on the organization run by gold trader Reza Zarrab, but later grew to include dozens of others. He called Erdogan the “number one” target in a group that also included Mehmet Zafer Caglayan, the former economy minister, and Suleyman Aslan, ex-chief executive of Turkiye Bank Halkasi AS, a large Turkish state-owned bank, which was central to the scheme.
Korkmaz — a boyish 30-year-old in eyeglasses and a button-down sweater under his suit — described a harrowing ordeal in which he was reassigned from the case within days of a 2013 raid and ultimately jailed. He said he fled the country and took with him a cache of the investigative materials, which he eventually turned over to U.S. authorities.
“I left the country I dearly loved,” he said tearfully.
The testimony of Korkmaz, who was head of the investigative team, confirms for the first time that the corruption case in Turkey was aimed directly at Erdogan — not just his ministers, associates and family members. It may help explain why Erdogan responded so forcefully to it, as well as the Turkish government’s angry response to the probe being re-opened in the U.S. Erdogan called the Turkish investigation a coup plot that sought to remove his government from power, and he purged prosecutors and judges from the judiciary.
The Turkish investigation ended after Zarrab’s December 2013 arrest in Turkey and a raid on the home of Aslan, which recovered millions of dollars in cash stuffed into shoe boxes. Photos of the cash recovered from the raid were shown to the jury on Monday in Manhattan federal court.
As the U.S. ratcheted up financial sanctions on Iran in retaliation for its effort to build a nuclear weapon, Iran was increasingly unable to access billions of dollars piling up in overseas banks from oil sales to foreign countries. Prosecutors allege Zarrab, with the aid of Turkish officials and bank executives, ran a laundering scheme to get around the sanctions and use Iran’s money to make international payments on its behalf, including $1 billion that flowed through New York banks.
Zarrab pleaded guilty shortly before the U.S. trial and spent seven days on the witness stand testifying against Halkbank executive Mehmet Hakan Atilla, now the lone defendant in the case. Nine people have been indicted, including Aslan and Caglayan. All but Atilla and Zarrab have avoided U.S. arrest. Erdogan isn’t charged.
In his earlier testimony, Zarrab said he was told that Erdogan personally ordered that two Turkish banks be cut in on the laundering scheme, and that the prime minister ordered the resumption of the plot after the investigation was quashed. Erdogan was prime minister until late August 2014, when he became president.
Notably, little of the testimony from Korkmaz on Monday involved Atilla; instead, it focused on how the Turkish investigation came to be shut down. Prosecutors also showed jurors surveillance photographs in which Korkmaz said bribery payments were being made, including one depicting a man identified as Zarrab’s courier outside the office of a charitable foundation founded by Erdogan.
The laundering scheme first employed gold trading as a means of getting Iran’s money out of Halkbank, then turned to disguising the flows as humanitarian food shipments after revised sanctions rules banned the gold trade. The photo of the courier outside the charitable foundation, from July 7, 2013, was taken around the same time Zarrab was recorded in a wiretapped conversation discussing efforts to revive the gold trade, Korkmaz testified.
Under questioning by a prosecutor, Korkmaz said Atilla was among the Halkbank executives who were under scrutiny in Turkey, but he wasn’t aware of evidence that Atilla received bribes from Zarrab.
Other photos from the Turkish probe included one of Zarrab’s courier stopped at Istanbul Ataturk Airport with bundles of cash in a bag en route to see the economy minister and another of Zarrab arriving at the office of Turkey’s European Union ministry. A photo of two men outside Zarrab’s office showed them picking up what Korkmaz said was $200,000 in bribe money for the head of the interior ministry, which controls the police force.
Immediately after a series of raids on Dec. 17, 2013, Korkmaz said several of his colleagues were reassigned and new supervisors began issuing orders to not question witnesses about bribery allegations. While on his way to the prosecutors’ office to deliver a report about the investigation, he said he received an order not to turn it over, but did so anyway.
Five days after the raids, Korkmaz said he was given a new assignment guarding a bridge. Within months, he was sent to an office on the other side of the country and then, a few months later, he was arrested and jailed for more than a year.
He was released on bail in February 2016. Fearing for his safety, Korkmaz said he hired a smuggler in August 2016 to help him flee Turkey through a border crossing. Afraid he’d be tortured if caught and sent back home, he said he went through two countries before he obtained a new passport under a false name.
By that time, federal prosecutors in New York had already publicly filed charges against Zarrab and other members of his organization. Korkmaz ultimately came to the U.S. with the aid of American law enforcement officials. At the airport, he said, he gave authorities a trove of materials he’d taken, including audio recordings, photographs, statements and documents.
“The prosecutor and I believed the evidence would never be brought up in court, and the evidence would be destroyed,” he said. “So I took the initiative.”
The case is U.S. v. Atilla, 15-cr-867, U.S. District Court, Southern District of New York (Manhattan).
— With assistance by Bob Van Voris