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Zarrab to testify on sanctions-busting plot that included high-level Turkish officials

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Reza Zarrab, a Turkish-Iranian gold trader under indictment in New York for sanctions evasion, will be a witness in the trial of a co-conspirator and is expected to tell the jury the “inside story” of a plot to evade US sanctions on Iran that included officials at the highest levels of the Turkish government, Bloomberg Politics reported on Tuesday.

Zarrab himself was scheduled to be tried this week but has reached a plea deal and is cooperating with prosecutors to testify in the trial of Mehmet Hakan Atilla, a deputy chief executive officer at Turkey’s Halkbank who is accused of conspiring with Zarrab to launder money and funnel Iranian funds through the US financial system.

Prosecutors have asked the judge to unseal Zarrab’s plea agreement, and he is expected to take the witness stand either later on Tuesday or on Wednesday.

Zarrab, charged with helping to orchestrate a conspiracy to violate US sanctions on Iran and set to go on trial Nov. 27, had suddenly stopped appearing at recent court hearings, leading to speculation that a plea bargain had been reached and that he had agreed to become a government witness.

The disclosure of Zarrab’s cooperation hit markets in Turkey as the lira fell 1.7 percent and Halkbank shares dropped 7.9 percent, with yields on 10-year bonds surging to records above 13 percent, said Bloomberg.

Zarrab’s decision to cooperate is not only a major advance for prosecutors in their investigation of the alleged sanctions-busting scheme but could also further strain relations between Turkey and the United States, especially if Zarrab reveals evidence about corruption in Turkish government and banking circles, according to a New York Times report on Tuesday.

Other defendants charged in the case include former Economy Minister Mehmet Zafer Çağlayan and former Halkbank General Manager Süleyman Aslan, neither of whom are in the United States.

Assistant US Attorney David William Denton Jr. told jurors that this was a case about lies, Bloomberg reported.

“They covered up their lies with millions of dollars of bribes to the highest-level officials of the Turkish government,” Denton said, adding that among those who accepted bribes in exchange for covering up money laundering was former Economy Minister Çağlayan.

Zarrab, who is alleged to have bribed Turkish officials to facilitate the scheme, might now testify about details of the scheme as well as government corruption.

Turkish President Recep Tayyip Erdoğan has repeatedly raised the case with US officials, including President Donald Trump, and last week said the case against Zarrab was a conspiracy against Turkey. He claims it is a continuation of a corruption investigation in 2013 for which he blames Fethullah Gülen, a Turkish Islamic scholar living in self-imposed exile in Pennsylvania who is also accused by the Turkish government of masterminding a failed coup in July 2016.

Gülen and the movement he inspired have denied any involvement in either incident.

“When that plot failed, they set up the same plot in the US,” Erdoğan told Parliament on Nov. 21.

On Oct. 24 Erdoğan strongly criticized the US administration for allegedly trying to force Zarrab to give them names from the Turkish government, saying he would explain all the details.

“They are driving him [Zarrab] into a corner, trying to make him an informer by saying, ‘If you mention those names, it [your prison term] will be this long, if you mention those names it will be that long’,” Erdoğan said, adding: “We are following this. We know how to set the world on fire when all those issues are done. We will tell all,” he said.

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