Iran secured as much as $20b. from Turkey breaking sanctions

Turkish President Recep Tayyip Erdogan and a family member were allegedly involved in the complex graft operation.

JULY 24, 2015 03:34

Iran's President Hassan Rouhani shakes hands with Turkish Prime Minister Tayyip Erdogan (photo credit: REUTERS) — Iran's President Hassan Rouhani shakes hands with Turkish Prime Minister Tayyip Erdogan

(photo credit: REUTERS)

The Turkish government bought oil and natural gas from Iran in exchange for as much as $20 billion in gold, in a scheme designed to evade international sanctions, a courier who worked for an Iranian businessman revealed this week.

Turkish President Recep Tayyip Erdogan and a family member were allegedly involved in the complex graft operation.

The Turkish government bought 200 tons of gold during the years 2012 and 2013, Adem Karahan, who worked for businessman Reza Zarrab, told the Cumhuriyet newspaper.

“Four percent of that money went to politicians and 4 percent went to Zarrab. But we do not know who the actual owner of the money is. Zarrab is also earning money by transferring someone’s money,” Karahan said.

Karahan told the Istanbul-based Today’s Zaman daily, “Babak Zanjani, an Iranian businessman who had helped the former government [when Erdogan was prime minister of Turkey] evade Western sanctions and allegedly managed the Turkish operations – also linked to Zarrab – is now in jail.”

Iranian authorities arrested Zanjani in December 2013 for embezzling $1.9 billion (£1.2b) of energy revenue.

A quid pro quo agreement allowed Turkey, an energy-starved country, to, in violation of sanctions, obtain Iranian oil and gas in exchange for Iran’s cash-starved economy receiving as much as $20b. in converted gold-to-cash payments.

Previously, the reported total was $13b.

To avoid detection, the cash was apparently deposited in a Halkbank account in Turkey. The money was then converted to gold and transferred to Tehran, reportedly through the Dubai free-trade zone.

The Republican People’s (CHP) and Nationalist Movement (MHP) parties, the largest opposition forces in parliament, are pushing for a new criminal inquiry into the corruption case.

Both parties are possible coalition partners for Erdogan’s Justice and Development Party (AK Party) if a new government is formed.

The scandal has engulfed ministers from the AK Party. According to Today’s Zaman, Karahan implicated former Interior minister and Istanbul province governor Muammer Güler, former minister for EU Affairs Egemen Bagıs and former minister of economic Affairs Zafer Caglayan, all from Erdogan’s AKP: “It was also rumored at the company [owned by Zarrab] that millions of dollars were going to these people apart from gifts,” Karahan said.

Oktay Vural, the deputy chairman of the MHP, said, “The investigation must be reopened. This will show whether Turkey is a country governed by the rule of law or not. It’s not possible to cover up an issue with such international implications.”

Mengücek Gazi Çıtırık, the chairman of the Adana Bar Association, said, “Taking Karahan’s recent statement into consideration, we see that the corruption and money laundering acts were not restricted to just Turkey and that this issue also has some international aspects.

Thus, the decision to drop the investigation, made by the Chief Public Prosecutor’s Office despite the accumulated evidence, should be canceled and the investigation re-launched,” Voice of America reported.

The United States and the European made efforts to crack down on the sale of gold to Iran by imposing enhanced sanctions in 2013.

Turkey’s public prosecutor had pulled the plug on the corruption investigation in 2014.

Before that, then-prime minister Erdogan’s administration launched a wide-sweeping purge of police and judiciary figures. He said the authorities investigating his party and family were part of a “dirty plot” to disrupt his policies.

Prosecutors dropped the investigation against 53 suspects. A parallel investigation was rescinded against Erdogan’s son.

Transparency International said the prosecutor’s action “calls into question the rule of law in Turkey.”