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President Recep Tayyip Erdogan of Turkey arriving to address supporters at the Parliament in Ankara on Tuesday. Credit Presidential Palace, via Associated Press

Recep Tayyip Erdogan of Turkey personally ordered that two Turkish banks be allowed to participate in an oil-for-gold scheme that violated United States sanctions on Iran, according to testimony on Thursday by a Turkish-Iranian gold trader in a federal trial in Manhattan.

The gold trader, Reza Zarrab, who helped orchestrate the billion-dollar scheme, recently pleaded guilty to conspiring to evade the sanctions and has become a witness for American prosecutors.

On Thursday, Mr. Zarrab testified that in 2012, a senior Turkish official told him that Mr. Erdogan, now Turkey’s president, at the time its prime minister, and a second official, the treasury minister, had given orders for the banks “to start doing this trade with Iran.”

Mr. Zarrab’s testimony is the first time Mr. Erdogan has been implicated in the alleged sanctions busting, which first surfaced when the Turkish police uncovered the activity in 2013 — only to have their investigation quashed by Mr. Erdogan’s government.

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The Turkish-Iranian gold trader Reza Zarrab implicated Mr. Erdogan in an alleged sanctions-busting scheme in testimony on Thursday. Credit Depo Photos, via Associated Press

Since then, Mr. Erdogan has consistently condemned the American investigation into the scheme, raising the matter repeatedly with American officials, including President Trump in September.

As recently as Thursday, before Mr. Zarrab, 34, told his story to jurors in Federal District Court in New York, Mr. Erdogan said, “We did not breach the sanctions.”

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“Whatever the verdict is, we did the right thing,” he said at a closed meeting with his deputies, Turkish state media reported. “We have never made commitments to the U.S. on our energy ties with Iran.”

“The world is not only about the U.S.,” he added. “We also have trade and energy relations with Iran.”

Mr. Zarrab’s testimony about Mr. Erdogan was relatively brief, coming in the first week of the trial of a Turkish banker, Mehmet Hakan Atilla, 47, who was also charged in the scheme.

Mr. Zarrab testified that it was Zafer Caglayan, Turkey’s economy minister at the time, who told him of Mr. Erdogan’s approval for the two banks, Ziraat Bank and VakifBank, to participate in the scheme.

On Wednesday, Mr. Zarrab testified that he had paid bribes of 45 million to 50 million euros and $7 million to Mr. Caglayan; he said Mr. Caglayan asked for 50 percent of the profits generated by the scheme, which was being run through a Turkish state bank, Halkbank.

On Thursday, Mr. Zarrab said he had also paid bribes to the general manager of Halkbank, Suleyman Aslan, who was critical to their scheme, he said.

Mr. Caglayan and Mr. Aslan have also been charged with participating in the sanctions evasion scheme and remain at large, prosecutors have said.

Continue reading the main story

Recep Tayyip Erdogan of Turkey personally ordered that two Turkish banks be allowed to participate in an oil-for-gold scheme that violated United States sanctions on Iran, according to testimony on Thursday by a Turkish-Iranian gold trader in a federal trial in Manhattan.

The gold trader, Reza Zarrab, who helped orchestrate the billion-dollar scheme, recently pleaded guilty to conspiring to evade the sanctions and has become a witness for American prosecutors.

On Thursday, Mr. Zarrab testified that in 2012, a senior Turkish official told him that Mr. Erdogan, now Turkey’s president, at the time its prime minister, and a second official, the treasury minister, had given orders for the banks “to start doing this trade with Iran.”

Mr. Zarrab’s testimony is the first time Mr. Erdogan has been implicated in the alleged sanctions busting, which first surfaced when the Turkish police uncovered the activity in 2013 — only to have their investigation quashed by Mr. Erdogan’s government.

Since then, Mr. Erdogan has consistently condemned the American investigation into the scheme, raising the matter repeatedly with American officials, including President Trump in September.

As recently as Thursday, before Mr. Zarrab, 34, told his story to jurors in Federal District Court in New York, Mr. Erdogan said, “We did not breach the sanctions.”

“Whatever the verdict is, we did the right thing,” he said at a closed meeting with his deputies, Turkish state media reported. “We have never made commitments to the U.S. on our energy ties with Iran.”

“The world is not only about the U.S.,” he added. “We also have trade and energy relations with Iran.”

Mr. Zarrab’s testimony about Mr. Erdogan was relatively brief, coming in the first week of the trial of a Turkish banker, Mehmet Hakan Atilla, 47, who was also charged in the scheme.

Mr. Zarrab testified that it was Zafer Caglayan, Turkey’s economy minister at the time, who told him of Mr. Erdogan’s approval for the two banks, Ziraat Bank and VakifBank, to participate in the scheme.

On Wednesday, Mr. Zarrab testified that he had paid bribes of 45 million to 50 million euros and $7 million to Mr. Caglayan; he said Mr. Caglayan asked for 50 percent of the profits generated by the scheme, which was being run through a Turkish state bank, Halkbank.

On Thursday, Mr. Zarrab said he had also paid bribes to the general manager of Halkbank, Suleyman Aslan, who was critical to their scheme, he said.

Mr. Caglayan and Mr. Aslan have also been charged with participating in the sanctions evasion scheme and remain at large, prosecutors have said.

Nytimes

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