By Raffi Bedrosyan
In a small courtroom in Manhattan, there is a legal drama playing out, which may have serious consequences for the US, Turkey and Iran, but more critically for the Turkish President Recep Tayyip Erdogan. This court case is a ticking time bomb which may explode in President Erdogan’s face, despite all his clandestine efforts to diffuse it.
Reza Zarrab, a 33-year-old Turkish citizen of Iranian descent, was arrested in Miami on March 17, 2016, as soon as he got off the plane. He stated that he had come to the US with his wife and daughter to see the Disney World. But the three charges against him were serious — conspiring to evade US sanctions against Iran, money laundering and bank fraud. He was promptly transferred to a New York jail, where he resides at present.
And the connection to President Erdogan? Read on, as this is an international thriller in the making.
For several years, the US had slapped sanctions on Iran to contain Iran’s nuclear ambitions. The US had imposed strict controls on all international banks and corporations, banning them from doing any business with Iran. Therefore, Iran faced great difficulty getting paid for its oil exports. A couple of Iranian businessmen, Babek Zenjani in Tehran and Reza Zarrab in Istanbul, stepped up to circumvent the sanctions. Oil payments would be made to companies and banks in Turkey, huge amounts of gold would be bought with those funds, and then the gold would be exported from Turkey to Iran, directly or perhaps with a few stops in Dubai, United Arab Emirates and other places in between. This scheme, although very simple, required huge amounts of money and gold transferred on a daily basis, which would undoubtedly attract the unwanted attention of government officials. That problem would be addressed by generous bribes, commissions and police protection. When you are moving billions of dollars daily, a few hundred million dollars to government officials is just the cost of doing business.
So, with the system set up in Iran and Turkey, Reza Zarrab quickly became a “gold trading” tycoon in Turkey, making headlines with large donations to religious charities linked to Erdogan as a philanthropist, marrying a pop star singer and buying several mansions along the Bosphorus. Erdogan’s government also bestowed Turkish citizenship on him with a special decree. There were a few mishaps in the scheme, such as 1.5 metric tons of gold seized in the cargo of an airplane in Istanbul by a ‘misguided’ or ‘uninformed’ customs official, who was promptly suspended and sent into “exile” to the interior part of Turkey. But the scheme blew up and came out in the open on December 17, 2013, when Turkish police, or rather, a certain section of Turkish police not loyal to Erdogan, arrested Reza Zarrab and the sons of three cabinet ministers, along with a few bank leaders. They had indisputable evidence, wiretaps, videos, telephone conversations and documents proving the large amounts of bribes passed on from Zarrab to the ministers and bank officials. Money counting machines in living rooms, several million dollars in shoe boxes, expensive gifts and money being delivered to the ministers’ homes in suit bags, all the dirty laundry came out. One of the most interesting telephone conversations released by the investigators and reported by several media outlets was between Erdogan and his son, when Erdogan instructs his son to get rid of all cash in the house, after he hears about the raids to his ministers’ houses. His son’s response after several hours of frantic work reveals that despite all his attempts to distribute the cash at home to colleagues, relatives or associates, there is still some 30 million euros left at home. Despite the evidence, Erdogan did manage to escape the investigation unscathed, fired the three ministers, but also fired all the police officials and prosecutors involved in this operation, claiming that this was a conspiracy and coup attempt by the followers of Fethullah Gulen, the Moslem fundamentalist preacher living in exile in Pennsylvania, US. Most of the police officials and prosecutors are now in jail, and a few lucky ones have fled the country.