Photo
Reza Zarrab in Istanbul in 2013. Mr. Zarrab, a Turkish gold trader, has pleaded guilty in an Iran sanctions-busting case and is now a prosecution witness. Credit Depo Photos, via Associated Press

A gaunt man in tan jail clothes took the witness stand Wednesday and began testifying about how he had bribed a Turkish economy minister as part of a billion-dollar scheme to smuggle gold for oil in violation of United States sanctions on Iran.

The witness, Reza Zarrab, a Turkish-Iranian gold trader, had been charged with conspiring to violate the sanctions and had faced a trial with Mehmet Hakan Atilla, an official with Halkbank, a Turkish state bank that prosecutors say was involved in the scheme.

But last month, Mr. Zarrab secretly pleaded guilty and agreed to cooperate with the authorities, a development revealed when Mr. Atilla’s trial opened in Federal District Court in Manhattan this week.

As Mr. Zarrab testified against Mr. Atilla, he was asked by a prosecutor why he had decided to help the American authorities. He offered a pragmatic reason.

“Cooperation was the fastest way to accept responsibility and to get out of jail at once,” he said.

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Mr. Zarrab is currently being held at an undisclosed location — in F.B.I. custody and not in a hotel, he told the court.

“Are you free to come and go as you please?” the prosecutor, Sidhardha Kamaraju, asked.

“Definitely not,” he said.

The prosecution of Mr. Zarrab, Mr. Atilla and seven other people who remain at large — including the former economy minister, Zafer Caglayan — has sent tremors through Turkish political circles.

Allegations that Mr. Caglayan had taken bribes surfaced in a 2013 Turkish police investigation, when Turkey’s president, Recep Tayyip Erdogan, was prime minister. A prosecutor told the jury on Tuesday that corrupt Turkish officials had shut down that inquiry, but that the F.B.I.’s own investigation “tells the same story” as the Turkish police found.

Mr. Erdogan has bitterly condemned the new prosecution and sought to persuade American officials to drop it.

Mr. Zarrab’s first day of testimony was focused on his decision to cooperate and on how he carried out the scheme. He said he had paid Mr. Caglayan tens of millions of dollars in bribes, and took the jury through accounting records that were displayed on a screen and listed the amounts and dates of the payments.

Mr. Zarrab, 34, usually has a thick black beard but had shaved it for the trial. During the questioning, he appeared calm. He looked directly at the prosecutor, answering his questions through an interpreter in a polite tone and with an earnest manner.

He became more animated when describing the methods he had used to get around the sanctions, gesturing and blinking rapidly as he explained how he had transferred gold and money.

When Mr. Kamaraju asked him to step down from the witness stand and draw diagrams on white poster board to show how his scheme worked, Mr. Zarrab almost resembled a business-school lecturer, sketching lines and boxes with colored markers and explaining as he went.

“In other words, the blue and the red lines would merge here,” he told the jury.

After he had finished, the judge, Richard M. Berman, asked him approximately how many separate transactions he had drawn on his last diagram “to get the money from where it couldn’t leave to where it could leave.”

After counting, Mr. Zarrab declared, “A minimum of 10.”

Only occasionally did he appear slightly uncomfortable, shuffling in his chair and taking a sip of water as he identified the defendant, Mr. Atilla, 47, who was seated at the defense table.

Mr. Kamaraju also asked whether Mr. Zarrab had hired lawyers to explore whether he could be released as part of a prisoner exchange.

“Within the legal limits, yes, of course,” Mr. Zarrab said.

The reference was apparently to Mr. Zarrab’s decision to retain Rudolph W. Giuliani, the former New York mayor and an informal adviser to President Trump, and Michael B. Mukasey, a former United States attorney general, to try to negotiate a diplomatic resolution to his case.

The lawyers met with President Erdogan and talked with senior Trump administration officials.

“Were they successful?” Mr. Kamaraju asked.

“No,” Mr. Zarrab replied.

By the end of the day in Turkey, and more than four hours after Mr. Zarrab testified about bribing Mr. Caglayan, neither the Turkish state broadcaster nor the news agency had reported on the testimony.

Yet Twitter was abuzz with tens of thousands of Turks following live feeds from other news outlets, such as BBC Turkish and other independent news sites, causing “Zafer Caglayan” to become a worldwide Twitter trending topic.

Continue reading the main story

A gaunt man in tan jail clothes took the witness stand Wednesday and began testifying about how he had bribed a Turkish economy minister as part of a billion-dollar scheme to smuggle gold for oil in violation of United States sanctions on Iran.

The witness, Reza Zarrab, a Turkish-Iranian gold trader, had been charged with conspiring to violate the sanctions and had faced a trial with Mehmet Hakan Atilla, an official with Halkbank, a Turkish state bank that prosecutors say was involved in the scheme.

But last month, Mr. Zarrab secretly pleaded guilty and agreed to cooperate with the authorities, a development revealed when Mr. Atilla’s trial opened in Federal District Court in Manhattan this week.

As Mr. Zarrab testified against Mr. Atilla, he was asked by a prosecutor why he had decided to help the American authorities. He offered a pragmatic reason.

“Cooperation was the fastest way to accept responsibility and to get out of jail at once,” he said.

Mr. Zarrab is currently being held at an undisclosed location — in F.B.I. custody and not in a hotel, he told the court.

“Are you free to come and go as you please?” the prosecutor, Sidhardha Kamaraju, asked.

“Definitely not,” he said.

The prosecution of Mr. Zarrab, Mr. Atilla and seven other people who remain at large — including the former economy minister, Zafer Caglayan — has sent tremors through Turkish political circles.

Allegations that Mr. Caglayan had taken bribes surfaced in a 2013 Turkish police investigation, when Turkey’s president, Recep Tayyip Erdogan, was prime minister. A prosecutor told the jury on Tuesday that corrupt Turkish officials had shut down that inquiry, but that the F.B.I.’s own investigation “tells the same story” as the Turkish police found.

Mr. Erdogan has bitterly condemned the new prosecution and sought to persuade American officials to drop it.

Mr. Zarrab’s first day of testimony was focused on his decision to cooperate and on how he carried out the scheme. He said he had paid Mr. Caglayan tens of millions of dollars in bribes, and took the jury through accounting records that were displayed on a screen and listed the amounts and dates of the payments.

Mr. Zarrab, 34, usually has a thick black beard but had shaved it for the trial. During the questioning, he appeared calm. He looked directly at the prosecutor, answering his questions through an interpreter in a polite tone and with an earnest manner.

He became more animated when describing the methods he had used to get around the sanctions, gesturing and blinking rapidly as he explained how he had transferred gold and money.

When Mr. Kamaraju asked him to step down from the witness stand and draw diagrams on white poster board to show how his scheme worked, Mr. Zarrab almost resembled a business-school lecturer, sketching lines and boxes with colored markers and explaining as he went.

“In other words, the blue and the red lines would merge here,” he told the jury.

After he had finished, the judge, Richard M. Berman, asked him approximately how many separate transactions he had drawn on his last diagram “to get the money from where it couldn’t leave to where it could leave.”

After counting, Mr. Zarrab declared, “A minimum of 10.”

Only occasionally did he appear slightly uncomfortable, shuffling in his chair and taking a sip of water as he identified the defendant, Mr. Atilla, 47, who was seated at the defense table.

Mr. Kamaraju also asked whether Mr. Zarrab had hired lawyers to explore whether he could be released as part of a prisoner exchange.

“Within the legal limits, yes, of course,” Mr. Zarrab said.

The reference was apparently to Mr. Zarrab’s decision to retain Rudolph W. Giuliani, the former New York mayor and an informal adviser to President Trump, and Michael B. Mukasey, a former United States attorney general, to try to negotiate a diplomatic resolution to his case.

The lawyers met with President Erdogan and talked with senior Trump administration officials.

“Were they successful?” Mr. Kamaraju asked.

“No,” Mr. Zarrab replied.

By the end of the day in Turkey, and more than four hours after Mr. Zarrab testified about bribing Mr. Caglayan, neither the Turkish state broadcaster nor the news agency had reported on the testimony.

Yet Twitter was abuzz with tens of thousands of Turks following live feeds from other news outlets, such as BBC Turkish and other independent news sites, causing “Zafer Caglayan” to become a worldwide Twitter trending topic.

Nytimes

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