Turkey’s second-largest public lender Halkbank has reportedly signed a $1.5-million deal with Ballard Partners, a U.S. lobbying firm that already represents the Turkish government. The deal raises questions about whether this may be part of an apparent effort to bring back home two Turkish nationals accused of sanctions-busting who are currently awaiting trial in New York.
The bank’s deputy CEO Mehmet Hakan Atilla and Turkish-Iranian gold trader Reza Zarrab have been sitting in a U.S. jail since March of this year and last, respectively. They stand accused of circumventing sanctions against Tehran’s illicit nuclear program between 2012 and 2013, and doing so in U.S. currency. At the height of the U.S.-led international sanctions regime against Iran, they are alleged to have played leading roles in Ankara’s “gas-for-gold” scheme, which enabled Iran to bring in billions. Both Zarrab and Atilla have pleaded not guilty.
A later iteration of the scheme, according to allegations in a Turkish prosecutor’s report from 2013, included money-laundering, often through front companies in Dubai and China, with Zarrab allegedly bribing ministers and Halkbank representatives to keep them mum. After several fits and starts, the trial is now set to begin in New York on October 30.
In March, however, Zarrab hired Rudy Giuliani of Greenberg Traurig, a lobbying firm that also represents Turkey in other matters, and Michael Mukasey, a former attorney general now at Debevoise & Plimpton, to try to forge an agreement with the White House. In a pre-trial hearing in April, the two acknowledged their intent to seek a “diplomatic solution” for Zarrab to New York Southern District Judge Richard Berman.
Halkbank’s foray into the Washington lobbying market at what appears to be a sensitive juncture in those cases raises questions about whether there may be a similar effort to free Atilla. Should the jury convict the banker this fall, it would likely be cause for concern for Halkbank. While the bank itself is not part of the investigation, other foreign banks like BNP Paribas have faced steep penalties when implicated in sanctions-evasion schemes.
The hiring of Ballard Partners also follows last week’s state-of-emergency decree by Turkish President Recep Tayyip Erdogan, which specifically empowers him to swap prisoners with foreign leaders. Since the 2016 failed coup attempt in Turkey, Ankara has jailed several European journalists, and American Pastor Andrew Brunson, on questionable charges. Western officials believe Erdogan to be engaging in hostage diplomacy, hoping to trade these inmates for Turkish offenders abroad.
The trial of these two Turks, given that that the revelations of the court case could greatly embarrass Erdogan and his inner circle, has been cast as test of U.S.-Turkish relations. Halkbank’s recent lobbyist push raises more questions about whether it may become a test of the American justice system, as well.
Aykan Erdemir is a former member of the Turkish parliament and a senior fellow at the Foundation for Defense of Democracies, where Merve Tahiroglu is a research associate. Follow them on Twitter @aykan_erdemir and @MerveTahiroglu.