By PATRICK KINGSLEY and BENJAMIN WEISER | NYT | Oct. 14, 2017

The conversations caught on wiretaps planted by the Turkish police are alleged to
show a conspiracy to help Iran skirt American sanctions by trading gold for gas.

The recordings also suggest that the plotters aimed to please one man: Recep
Tayyip Erdogan, then the prime minister of Turkey, now the president.
The Erdogan government has dismissed the telephone recordings as fabrications concocted in 2013 by treasonous adversaries who had infiltrated the
Turkish police and judiciary.

But United States prosecutors have taken a different view. They have cited the
2013 Turkish investigation in court papers filed in New York where nine men —
including a senior Turkish bank official — have been charged with conspiring to
evade American sanctions on Iran.

The sanctions case has strained relations between the United States and Turkey,
and drawn repeated condemnation from Mr. Erdogan. He has often raised it with
American officials, including in a telephone call with President Trump on Sept. 9. A
day earlier, Mr. Erdogan described the indictment as “a step against the Turkish
Republic.”
And in recent days, as tensions between the countries grew worse amid a diplomatic
officials justified their actions by equating them to the embargo charges in New
York.
“You will arrest my bank’s deputy general manager for no reason, and will try
another citizen of mine for two years, and want to use him as an informant,” Mr.
Erdogan said in speech on Thursday in which he defended the American employee’s
arrest.

A close reading, however, of a lengthy summary of the Turkish investigation,
which prosecutors have filed in Federal District Court in Manhattan and which
includes excerpts from transcripts of the wiretap recordings, suggests that Mr.
Erdogan’s objections may involve more than just patriotism. In several of the
conversations, the records show, three of the men now charged discuss meeting with
Mr. Erdogan and acting, as one puts it, on “the prime minister’s order” to increase
Turkish trade.

The excerpts, a copy of which has been translated independently by The New
York Times, do not suggest that Mr. Erdogan was aware of any illegal activity, and he
is neither named nor referred to in an American indictment filed last month. But
they offer evidence that Mr. Erdogan, back in 2013, was meeting regularly with
several of the men at the height of their suspected sanctions busting.
One question now is whether one or more of the defendants — two of whom are
jailed in New York and scheduled for trial on Nov. 27 — might still plead guilty and
cooperate with the United States authorities in the hope of winning leniency in
sentencing.
“I’m sure Erdogan worries about that, and I’m sure he worries about what could
come out at trial,” said Eric S. Edelman, a former United States ambassador to
Turkey. “Either one could be very damaging to him.”

The case currently centers on three men, all of whom knew Mr. Erdogan
personally. Reza Zarrab, a Turkish-Iranian gold trader, is suspected of having helped
the Turkish government bypass United States sanctions on Iranian trade by using
gold and other nonmonetary goods to pay for Iranian gas. American prosecutors say
that Mr. Zarrab was helped by Zafer Caglayan, then Turkey’s economy minister, and
Suleyman Aslan, at the time the chief executive of a state-owned Turkish bank.
Mr. Caglayan and Mr. Aslan are not in custody of either the United States or
Turkey; Mr. Zarrab has been jailed in the United States since March 2016, after
being arrested during a family trip to Disney World.
Mr. Zarrab has enlisted a team of high-profile lawyers to assist in his defense,
among them Rudolph W. Giuliani, the former mayor of New York and an informal
adviser to Mr. Trump, and Michael B. Mukasey, a former United States attorney
general. They have met with Mr. Erdogan and senior Trump administration officials
in an effort to resolve the case as a diplomatic matter.
Mr. Zarrab’s lead lawyer, Benjamin Brafman, declined to comment. Mr. Zarrab
has pleaded not guilty.

The case has been largely ignored by the public in the United States. But it has
been widely reported and discussed in Ankara, where many of the government’s
supporters see it as a continuation of a December 2013 attempt by parts of the
Turkish judiciary to unseat Mr. Erdogan’s administration.

At that time, prosecutors in Turkey announced investigations into Turkish
officials suspected in several corruption scandals. Mr. Caglayan and two other
ministers quickly resigned, and Mr. Aslan and Mr. Zarrab were arrested, in what was
the biggest challenge to Mr. Erdogan’s reputation since his party came to power in
2002.

Mr. Erdogan presented the investigations as a de facto coup attempt, mounted
by followers of the same Islamist sect — the Gulen movement — that Mr. Erdogan
would later say led a failed military putsch in July 2016. Mr. Erdogan’s government
quickly shut down the investigations and released Mr. Zarrab and Mr. Aslan. Many
of the police officers and prosecutors involved in the cases were later purged from
their jobs.

The 2013 allegations, and the wiretaps on which they were based, were
denounced as fiction — claims that many Turks found credible because of the Gulen
movement’s problematic history. Gulenist prosecutors had been found to have
fabricated evidence in earlier trials of secular army officers. (This week, Turkey’s
state-run news agency said the American Embassy employee whose detention had
fanned tensions had links to one of those prosecutors.)
But four years on, court filings in Manhattan show, these same recordings have
become a part of the United States case.

The court records show that Mr. Erdogan’s voice was not captured on any of
these particular recordings. But in the fall of 2013, he is referred to frequently by his
office in conversations among some of the people suspected of conspiracy.

In June 2013, the Obama administration had closed the loophole that had
allowed Turkey to pay for Iranian gas with gold. That fall, two of the alleged
conspirators discussed finding an alternative method to evade the sanctions,
according to transcripts of the recordings cited in the case.

The method the men are accused of settling on had problematic side effects for
the Turkish economy. Since large quantities of gold were no longer being channeled
through Turkey, the country’s trade deficit looked set to increase.

Mr. Erdogan was alarmed by this development, according to statements
captured by the wiretaps. With local elections looming, Mr. Erdogan may have
feared damage to his reputation as a savvy manager of the Turkish economy.
According to the recordings, Mr. Erdogan spoke with Messrs. Zarrab, Caglayan and
Aslan about the need to restore Turkish export figures to the record high of the
previous year.

There is no evidence that Mr. Erdogan demanded or expected this to be
achieved through illegal means. But the result he sought had previously been
accomplished only through a method that was now outlawed under American
sanctions. And the defendants charged in the United States are accused, in part, of
returning to a version of the gas-for-gold scheme — a course of action Turkish
investigators say the men took after they had spoken with Mr. Erdogan.

In one of the conversations, on Sept. 19, 2013, Mr. Zarrab claimed that he had
personally spoken to Mr. Erdogan about the trade deficit, and had assured the leader
he would help increase Turkish exports by $4 billion. “We have to do our best to
achieve this $4 billion goal,” Mr. Zarrab is quoted as telling the bank chief, Mr.
Aslan, “because I promised the prime minister.”
In a separate conversation on the same day, Mr. Zarrab told another associate
that a smaller increase would be better than nothing. “Even two billion is important
because I will go to meet the prime minister directly,” Mr. Zarrab said, according to
the transcript.
In a conversation two weeks later, on Oct. 3, 2013, Mr. Caglayan told Mr. Aslan
that Mr. Erdogan had directly demanded an increase in exports. “Turkey needs at
least $2 to $4 billion in exports,” Mr. Caglayan said. “Last night we had a two-hour
meeting with the prime minister in Istanbul and explained to him that there is a lot
of pressure.”
Turkish investigators concluded from another conversation, on Sept. 16, 2013,
that Mr. Aslan had spoken to Mr. Erdogan, who told him to “do something, whatever
the method” to increase exports. The transcripts do not show that Mr. Erdogan was
told how Mr. Zarrab, Mr. Aslan and Mr. Caglayan intended to increase exports — or
that Iran was the ultimate beneficiary of Mr. Zarrab’s alleged scheme.
“My reading of the transcripts, as someone who has been covering Turkish
politics for 27 years, leads me to say that Erdogan fully understood what was going
on,” said Atilla Yesilada, an Istanbul-based consultant at Global Source Partners, an
analysis firm, and a political commentator.

Mr. Yesilada acknowledged that nothing in the transcripts showed that the issue
of sanctions busting had been brought to Mr. Erdogan’s attention.
Mr. Erdogan himself, however, has spoken publicly in the past about his
willingness to break the United States sanctions on Iran.

Source | https://www.nytimes.com/2017/10/14/world/europe/turkey-new-york-case.html

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