Turkey’s state-run Halkbank pleads not guilty to US criminal charges

Turkey’s state-owned Halkbank on March 31 pleaded not guilty to criminal charges in a federal court in Manhattan that it helped Iran evade US sanctions, in a case that has strained relations between the United States and Turkey. The plea – to charges including conspiracy, bank fraud, and money laundering – was entered by the bank’s US lawyer at a hearing conducted by telephone conference because of the coronavirus pandemic.

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Halkbank agrees to respond to US criminal chargesHalkbank agrees to respond to US criminal charges

Turkey’s state-run Halkbank pleaded not guilty March 31 to a record-breaking money-laundering scheme.

“First of all, welcome everybody,” said U.S. District Judge Richard Berman, greeting listeners across the globe who called in for the extraordinary hearing, Courthouse News reported.

“We are, as you know, proceeding by teleconference today rather than physically proceeding in court and a courtroom,” Berman added. “Of course, we’re doing this because of the coronavirus pandemic.”

More than two years ago, Judge Berman presided over the trial of Halkbank’s former manager Hakan Atilla in the Southern District of New York, in a case that also captured a rapt, global audience from Manhattan to Istanbul.

Turkish citizens tuned into that trial because of blockbuster testimony by gold trader Reza Zarrab, who implicated Turkish authorities in billions of dollars of U.S. sanctions-busting trades for Iran.

US court grants Halkbank reprieve in Iran sanctions caseUS court grants Halkbank reprieve in Iran sanctions case

Following the Turkish government’s categorical denials of complicity in the scheme, Robert Cary, an attorney for its state-run bank, declared today: “Halkbank pleads not guilty on all counts of the indictment.”

Erdoğan’s government aggressively lobbied two successive U.S. administrations, making inroads with the Trump White House, to kill the prosecution.

Before pleading guilty, Zarrab retained Rudy Giuliani, who shuttled between the White House and Turkey’s capital of Ankara in a failed effort at a prisoner swap that would have effectively buried the charges. Subsequent reporting uncovered Trump administration efforts to delay Halkbank’s prosecution following the conviction of the bank’s ex-manager, Hakan Atilla, in 2018.

Senator Ron Wyden has been investigating Trump’s suspected interference in the Halkbank case, as his Democratic allies in the Senate probe Giuliani’s role in the matter.

US seeks big contempt fines against Turkey's HalkbankUS seeks big contempt fines against Turkey's Halkbank

More than a year would pass until the U.S. indicted Halkbank on Oct. 15, roughly a week after Trump withdrew from Syria after a phone call with Erdoğan.

Halkbank initially refused to recognize the legitimacy of the proceedings by the time it was arraigned, but later agreed to participate, under threat of being slapped with enormous fines for contempt of court.

Now that criminal proceedings have formally begun, the coronavirus pandemic represents another hurdle. Halkbank swapped its former attorneys at King & Spalding, a former registered agent for the Turkish government, for the firm Williams & Connelly, which helped polish the image Myanmar’s likewise scandal-ridden Kanbawza Bank.

Williams & Connelly’s attorney Robert Cary told the judge: “I was hired to try to turn over a new leaf in this case.”

Cary added doing so would require visiting his clients in Turkey in person to determine how to proceed and whether to seek the judge’s recusal, at a time when social-distancing measures make air travel difficult if not impossible.

Senator's Halkbank probe runs into US Treasury Secretary meeting with ErdoğanSenator's Halkbank probe runs into US Treasury Secretary meeting with Erdoğan

Opposing further delay in the case, Assistant U.S. Attorney Michael Lockard noted that courts, law firms and major institutions around the world have been hunkering down and adapting to a reality of working remotely.

“I think we all understand and are operating under the new state of affairs created by the Covid-19 situation,” Lockard said, adding that even the G7 meeting was being held via videoconference.

Judge Berman split the difference, granting a 70-day adjournment slightly narrower than the three months Halkbank requested.

A follow-up conference has been set for the morning of June 9, at which time Judge Berman said he hopes to have a video-feed available if the courts remain closed.