Turkey Starts Probe on U.S. Attorneys Before Zarrab Trial Begins

(Bloomberg) -- Istanbul’s top prosecutor has launched an unprecedented probe into counterparts in the U.S., ahead of a high-profile trial centered on a businessman accused of evading sanctions against Iran.

Turkey is investigating Joon H. Kim, acting U.S. Attorney for the Southern District of New York, and his predecessor, Preet Bharara, over how evidence was collected in the case against Reza Zarrab, a Turkish-Iranian gold trader who has been in U.S. custody since March 2016.

The Chief Prosecutor’s office of Istanbul questioned the validity of evidence presented against Zarrab, according to a statement cited by Turkish state-run Anadolu Agency on Saturday. The case has become a flash point in relations between Turkey and the U.S. as it threatens to expose how powerful figures in Turkey may have undermined U.S. sanctions.

The prosecutor in Istanbul has asked U.S. legal authorities "how and when and from whom the documents, voice recordings and content” used in the New York case have been obtained, according to the statement. The actions “openly violate” international and domestic Turkish law, the prosecutor said.

“How can a nation that legitimizes all kinds of attacks on our nation’s interests, from bankers to businessmen, from arms sales to energy investments, from TV series to think tanks, be our friend?” President Recep Tayyip Erdogan said on Saturday in the northeastern city of Rize.

Zarrab, 34, is accused of using his network of companies to move money through the U.S. financial system on behalf of Iran and related companies, helping them evade sanctions when the U.S. was stepping up economic pressure on the country in retaliation for its nuclear ambitions. The sanctions against Iran were lifted in 2006. Zarrab’s trial is set to begin on Nov. 27.

Iran was able to process hundreds of millions of dollars in oil revenue to keep its economy humming, in part by using Turkish state-run lender Turkiye Halk Bankasi AS, to carry out fraudulent transactions by labeling them as allowable commerce, according to prosecutors. Hakan Atilla, a deputy chief executive officer of Halkbank, was arrested this year during a trip to the U.S. and accused of helping Zarrab. He denies wrongdoing.

The U.S. has alleged that some of the laundered funds benefited entities suspected of supporting terrorism, including Iran-based Mahan Airlines, which has allegedly aided Hezbollah and is blacklisted by the U.S. Treasury Department.

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