U.S. prosecutors on Match 28 charged an executive at a Turkish state-owned bank with participating in a multi-year scheme to violate U.S. sanctions against Iran, escalating a case that has added to tensions between the United States and Turkey.
Mehmet Hakan Atilla, a deputy general manager of Halkbank , is accused of conspiring with wealthy Turkish gold trader Reza Zarrab to conduct hundreds of millions of dollars of illegal transactions through U.S. banks on behalf of Iran’s government and other entities in that country.
Atilla, a 47-year-old Turkish citizen, looked somber as he appeared at a brief hearing before U.S. Magistrate Judge James Francis in Manhattan, a day after being arrested at John F. Kennedy International Airport.
It was unclear whether Atilla has hired a lawyer or made any bail application. He will remain in federal custody for now.
The lira weakened more than 1 percent against the dollar late on Tuesday after news of the arrest emerged and it stood at 3.6590 at 0553 GMT.
“After the first hearing was held, time was given to the prosecutor’s office to prepare an indictment,” Halkbank said in a statement.
“Our bank and relevant state bodies are conducting the necessary work on the subject and information will be shared with the public when it is obtained,” it added.
The charges expand a case that has drawn criticism from Turkish President Recep Tayyip Erdoğan, who has said he believed U.S. authorities had “ulterior motives” in prosecuting Zarrab.
Atilla was arrested on the same day it was revealed that Zarrab, the gold trader, had added former New York City Mayor Rudolph Giuliani, a confidante of President Donald Trump, to his legal team.
According to a criminal complaint, Atilla worked with Zarrab and others from 2010 to 2015 to conceal Zarrab’s ability to supply currency and gold to Iran through a Turkish bank, without subjecting the bank to U.S. sanctions.
As part of that scheme, Atilla and Zarrab used front companies and fake invoices to trick U.S. banks into processing transactions disguised to appear as though they involved food, and thus were exempt from U.S. sanctions, prosecutors said.
“United States sanctions are not mere requests or suggestions; they are the law,” Acting U.S. Attorney Joon Kim in Manhattan said in a statement.
Atilla was charged with conspiring to commit bank fraud, which carries a maximum 30-year prison term, and violating U.S. sanctions, which carries a maximum 20-year term.
Atilla had been in New York for the latest in a series of investor meetings ahead of a planned Halkbank dollar-denominated subordinated bond issue, Turkish bankers said.
Zarrab is widely known in Turkey, as his name was embroiled into the Dec. 17-21, 2013 graft operations that involved four former ministers and other state officials.
Charges against the businessman were dropped later.