The Turkish president’s biggest fear is that tycoons arrested in U.S., Iran will reveal Ankara’s role in evading sanctions against Tehran.

When President Recep Tayyip Erdogan arrives in Washington this week to participate in the Nuclear Security Summit, where he hopes to meet with U.S. President Barack Obama, he will bring along the putrid fumes of a scandal that refuses to release its grip on him.
The name of this stink bomb is Reza Zarrab, a Turkey-based businessman with dual Iranian and Turkish citizenship. The FBI arrested him in Miami in mid-March on charges of helping Iran evade sanctions. However, the scandal’s roots go much deeper, developing in Turkey over a five-year period.
Zarrab, a gold trader, is suspected of brokering blockbuster deals between the regime in Tehran under Mahmoud Ahmadinejad and international corporations. He transferred the sums through Turkish banks. He is also responsible for creating a “gold route”: facilitating the transfer of the precious metal from Turkey to Iran, in exchange for oil and gas from the latter, in order to evade American sanctions, which pertained to cash but not gold – until the United States closed off this route, too.

Zarrab was arrested in Turkey in 2013 on suspicion of bribing senior government officials, among them the sons of three top ministers. Erdogan’s son Bilal was also involved in the affair. The bribery was apparently necessary to allow money transfers via Turkey’s Halk Bank, whose general manager was arrested after millions of dollars stuffed in shoeboxes were discovered in his home.
The arrest of Zarrab, who had lived in particularly comfortable conditions, stirred a massive political storm in Turkey, whose echoes have yet to subside. Erdogan has blamed the prosecutors and police commissioner in Istanbul, as well as hundreds of police officers, judges and prosecutors of conspiracy to overthrow the government. Most of them were fired or transferred to other positions – while Zarrab was released and even received an award for export performance.
Zarrab, the Turkish-based businessman arrested by the FBI.

Reza Zarrab, the Turkey-based businessman with dual Iranian and Turkish citizenship. The FBI arrested him in Miami on charges of helping Iran evade sanctions. AFP

Zarrab had an Iranian boss by the name of Babak Zanjani, who was sentenced to death in Iran for money laundering and other crimes in early March. He was the owner of the Sorinet conglomerate, which was on the American blacklist because of sanctions violations.
Zanjani was accused of stealing hundreds of millions of dollars from state coffers, pocketing huge sums that the government should have received for deals he made in its name and with its money. For example, Zanjani sold oil and gas worth three billion dollars, depositing the money in banks in Malaysia and Turkey on behalf of the Iranian government. For its part, Turkey, when it could not transfer the money to Iran, used the said gold route, allowing Tehran to keep its head above water during the sanctions regime.
When Hassan Rohani came to power, he declared a policy of zero tolerance for corruption, and quickly targeted Zanjani not only because of his corrupt activities but also to settle scores with his predecessor, Ahmadinejad, who had provided Zanjani with full immunity and even gave him letters of recommendation for Iran’s central bank.
Zarrab, who did not know about the indictment against him in the United States, can expect to be sentenced to 75 years in prison if convicted. However, what scares Erdogan is what may come to light about the involvement of his government in these corruption scandals. In particular, he is worried about whether a connection will be revealed between senior members of his ruling party and/or his relatives, and the arrested billionaires.
Just like two years ago, Erdogan supporters have launched a campaign portraying the American prosecutor, Preet Bharara, as a close associate of Fethullah Gulan, Erdogan’s bitter political rival, and they are claiming the arrest of Zarrab is part of the effort to overthrow the Ankara regime. The problem is that Erdogan cannot fire Bharara or the FBI agents who arrested Zarrab, and he must hope that the Iranian court system does not decide to publish the protocols of Zanjani’s investigation, which could include embarrassing details about Turkish complicity in the sanctions-evasion affair.
Erdogan’s rivals in Turkey understand that Zarrab’s arrest won’t do them much good. The trial can drag on a long time, and the American indictment does not address the corruption scandal in Turkey. Thus, even if Zarrab were convicted, it would be on charges that do not affect Turkish politics. The pro-Erdogan Turkish media, too, are trying to downplay the story, while Erdogan’s critics in the press are using more cautious language so as not to risk libel suits.
“The only hope now is that the American justice system take the chestnuts out of the fire for us,” the editor of an important newspaper, who spoke on condition of anonymity, told Haaretz. “Indeed, they knocked off the head of the mafia in the United States for corruption and not for the really big crimes.“
     EAN