Prosecutors Charge Turkey's Halkbank in Sanctions Evasion Scheme

Date : 10/15/2019 @ 11:04PM
Source : Dow Jones News

Prosecutors Charge Turkey's Halkbank in Sanctions Evasion Scheme

By Rebecca Davis O'Brien and Aruna Viswanatha 

Federal prosecutors in Manhattan charged Turkish state-owned lender Halkbank with a multibillion-dollar scheme to evade U.S. sanctions on Iran, ramping up pressure on Turkey's President Recep Tayyip Erdogan as he conducts a military offensive on Syria.

The indictment unsealed Tuesday implicates high-ranking Iranian and Turkish government officials in an alleged scheme that enabled Iran to profit from sales of oil and gas in violation of Obama administration sanctions over Tehran's nuclear program. Prosecutors say some government officials received payouts of tens of millions of dollars in exchange for promoting and helping to conceal the alleged scheme, which occurred between 2012 and 2016.

Prosecutors allege that Halkbank and its officers used money-services businesses and front companies in Iran, Turkey, the United Arab Emirates and elsewhere to violate restrictions on Iran's access to the U.S. financial system; rules governing the proceeds of Iranian oil and gas sales; and restrictions on the supply of gold to Iran. The alleged scheme also benefited Turkey by artificially inflating the country's export statistics and making Turkey's economy appear stronger than it was, according to the indictment.

The indictment comes as the U.S. scrambles to contain the fallout from the Turkish military campaign into Syria, launched last week after President Trump decided to withdraw most troops from the country. Vice President Mike Pence to Turkey is leading a delegation to Turkey to resolve the conflict, and President Trump authorized sanctions, raised steel tariffs on Turkey and threatened more-powerful financial penalties if Ankara continues the offensive.

The charges against the bank are the latest flashpoint in a high-profile yearslong U.S. Justice Department investigation into sanctions evasions and international corruption involving the bank, which for years has drawn sharp protests from Turkish officials, including Mr. Erdogan. Nine defendants have previously been charged by Manhattan prosecutors, including the former Turkish minister of the economy and bank employees, most of whom remain fugitives.

Halkbank was charged with six criminal counts, including bank fraud, money laundering, and conspiracy to defraud the U.S.

A lawyer for Halkbank and a representative from the Turkish embassy in Washington couldn't immediately be reached for comment.

Turkish officials had said they expected clemency from the U.S. in the Halkbank case.

Write to Rebecca Davis O'Brien at Rebecca.OBrien@wsj.com and Aruna Viswanatha at Aruna.Viswanatha@wsj.com

 

(END) Dow Jones Newswires

October 15, 2019 18:49 ET (22:49 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.


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