U.S. Targets Turkey’s Halkbank as Tensions Rise
WASHINGTON (Dispatches) -- One of Turkey’s largest banks has been hit with charges of fraud and money laundering by U.S. prosecutors.
In a move likely to sharply escalate growing tensions between Ankara and Washington on the eve of a visit by U.S. Vice President Mike Pence to Turkey, New York prosecutors filed an indictment against Halkbank accusing it of violating U.S. sanctions on Iran.
The charges against the state-owned lender are the culmination of a long-running investigation into an elaborate gold-for-oil scheme that was allegedly carried out with the help of several former ministers in the government of Recep Tayyip Erdogan, the Turkish president.
Erdogan has previously described a related inquiry into one of the bank’s senior executives as a grand conspiracy that amounted to an "international coup attempt”.
Although it is rare for the U.S. Department of Justice to intervene in investigations, the timing of the charges is likely to be viewed with deep suspicion among the Turkish leadership, coming as Washington seeks to turn the screws on Ankara over its military incursion into Syria.
Jonathan Schanzer, a former U.S. Treasury official who followed the case closely, described the prosecution as "just one of the measures” that was being deployed by Donald Trump while "scrambling to deter Turkey” from its Syrian operation.
He said that Halkbank had refused to negotiate a fine, believing it "could outlast the Department of Justice through prolonged obstinacy”. Schanzer said the strategy "began to unravel” as friction mounted between the U.S. president and Erdogan over the Turkish incursion.
Announcing the charges, U.S. attorney Geoffrey Berman described Halkbank’s conduct as "audacious”, adding that it had been "supported and protected by high-ranking Turkish government officials, some of whom received millions of dollars in bribes”. He added: "Halkbank will now have to answer for its conduct in an American court.”
Prosecutors allege that proceeds from the sale of Iranian oil and gas to Turkey were deposited at Halkbank, which then used various sanction-busting schemes to make some $20 billion of the funds available to the government of Iran.
Halkbank has in the past denied violating U.S. sanctions. Halkbank said in a statement that the charges were filed as part of the Trump administration’s sanctions imposed this week on Turkey in response to Ankara’s military offensive against the Kurdish forces. The U.S. on Monday announced sanctions on several Turkish ministers and departments, and raised tariffs on the country’s steel exports.
Following the news of the prosecution, the Istanbul stock exchange announced it had "temporarily prohibited” short selling in the shares of seven banks, including Halkbank — which is part publicly traded — and several of the country’s biggest private lenders. It did not say how long the ban would last.
The decision to prosecute the lender came just hours before Pence was due to arrive in Ankara with a delegation of senior officials to discuss Turkey’s contentious military offensive against Kurdish militias in north-east Syria.
In a move likely to sharply escalate growing tensions between Ankara and Washington on the eve of a visit by U.S. Vice President Mike Pence to Turkey, New York prosecutors filed an indictment against Halkbank accusing it of violating U.S. sanctions on Iran.
The charges against the state-owned lender are the culmination of a long-running investigation into an elaborate gold-for-oil scheme that was allegedly carried out with the help of several former ministers in the government of Recep Tayyip Erdogan, the Turkish president.
Erdogan has previously described a related inquiry into one of the bank’s senior executives as a grand conspiracy that amounted to an "international coup attempt”.
Although it is rare for the U.S. Department of Justice to intervene in investigations, the timing of the charges is likely to be viewed with deep suspicion among the Turkish leadership, coming as Washington seeks to turn the screws on Ankara over its military incursion into Syria.
Jonathan Schanzer, a former U.S. Treasury official who followed the case closely, described the prosecution as "just one of the measures” that was being deployed by Donald Trump while "scrambling to deter Turkey” from its Syrian operation.
He said that Halkbank had refused to negotiate a fine, believing it "could outlast the Department of Justice through prolonged obstinacy”. Schanzer said the strategy "began to unravel” as friction mounted between the U.S. president and Erdogan over the Turkish incursion.
Announcing the charges, U.S. attorney Geoffrey Berman described Halkbank’s conduct as "audacious”, adding that it had been "supported and protected by high-ranking Turkish government officials, some of whom received millions of dollars in bribes”. He added: "Halkbank will now have to answer for its conduct in an American court.”
Prosecutors allege that proceeds from the sale of Iranian oil and gas to Turkey were deposited at Halkbank, which then used various sanction-busting schemes to make some $20 billion of the funds available to the government of Iran.
Halkbank has in the past denied violating U.S. sanctions. Halkbank said in a statement that the charges were filed as part of the Trump administration’s sanctions imposed this week on Turkey in response to Ankara’s military offensive against the Kurdish forces. The U.S. on Monday announced sanctions on several Turkish ministers and departments, and raised tariffs on the country’s steel exports.
Following the news of the prosecution, the Istanbul stock exchange announced it had "temporarily prohibited” short selling in the shares of seven banks, including Halkbank — which is part publicly traded — and several of the country’s biggest private lenders. It did not say how long the ban would last.
The decision to prosecute the lender came just hours before Pence was due to arrive in Ankara with a delegation of senior officials to discuss Turkey’s contentious military offensive against Kurdish militias in north-east Syria.