Global Affairs

Corruption Scandal Rocking Turkey Engulfs Bank Known for Iran Sanctions-Busting

A corruption probe involving some of Turkey’s top figures has engulfed officials at a Turkish bank long linked to Iranian sanctions-busting schemes, adding a potential international dimension to a scandal that was already threatening to destabilize the country’s Justice and Development Party (AKP) government.

The probe has pitted rival Islamist camps against each other, with the AKP squaring off against followers of U.S.-based cleric Fethullah Gulen. The cleric’s followers are influential across Turkey’s state and non-state institutions, and Erdogan has accused the camp of waging a “dirty operation” over recent days as police and prosecutors intensified anti-corruption investigations targeting AKP-linked political and economic elites. Erdogan and his allies have for their part responded by sacking a number of top judicial and police officials.

Fehim Tastekin, a columnist and chief editor of foreign news at the Istanbul-based newspaper Radikaloutlined today how moves against two of the sweep’s targets – Suleyman Aslan and Riza Sarraf, respectively the CEO of Halkbank and an Iranian businessman who deals with gold – may add international stakes to the firestorm:

Zarrab, who assumed the name of Riza Sarraf after becoming a Turkish citizen, has close links to Iran. After developing a web of relationships with ministers and their sons, he designed a system to funnel billions of dollars. Sarraf’s father had connections with former Iranian President Mahmoud Ahmedinejad. Sarraf was paying thousands in “commission” — bribes — to Minister of Economy Zafer Caglayan. Caglayan was paid 103 million lira ($49 million), and Aslan 16 million lira ($7.7 million), over two years. Caglayan, who wanted to inflate national export figures, wanted Sarraf to make the transfers in gold. At their Oct. 3 meeting, Caglayan told Sarraf, “You have to export at least $4 billion of gold before the end of the year.” The police investigation file says, “It was understood that Sarraf was trying to boost export figures in line with the demands of [Prime Minister Recep] Tayyip Erdogan, Zafer Caglayan and Suleyman Aslan,” noting that exports were also made to Dubai.

Oktay Ozdabakoglu, the finance and capital market expert at Radikal, was quoted noting that government involvement was likely:

While Sarraf and his cohorts were collecting their cuts, Turkey’s exports were increasing. Iran, supposedly under embargo, was continuing its trading, and meeting its hot money needs. A public bank was playing the key role in finalizing these transactions. It appears impossible that this operation could have been conducted without the permission or information of the government or quarters close to the government.

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