Turkish Banker's Lawyers Launch Attack on Trader's Testimony

(Bloomberg) -- Attorneys for a Turkish banker set out to attack the credibility of a gold and currency trader who pleaded guilty and became the government’s star witness, after U.S. prosecutors led him through days of testimony laying bare a scheme to launder money for Iran and bribe Turkish officials to allow it.

The cross-examination of the trader, Reza Zarrab, may be a make-or-break moment for the banker, Mehmet Hakan Atilla, who is on trial in New York for aiding the plot. Seeking to raise doubts in jurors’ minds about Zarrab’s reliability and trustworthiness, a defense attorney spent hours on Tuesday asking him about his cooperation deal with prosecutors, his attempt to win his freedom from a U.S. prison through “political means,” and the nature of his relationship with Atilla.

“I have never paid bribes to Mr. Hakan Atilla. Ever,” Zarrab testified under questioning from defense attorney Cathy Fleming.

Zarrab disclosed that he made between $100 million to $150 million from the laundering scheme, charging a rate of $4 to $5 per $1,000 moved on behalf of Iran. His personal take was reduced, he said, by the bribes he had to pay, the fees taken by the bank and the expense of the operation. He previously testified about hiring dozens of couriers to ferry suitcases of gold on commercial airlines across the Middle East.

Initially the key defendant in the case, Zarrab spent a year in U.S. jails awaiting trial before agreeing to plead guilty and cooperate with the government. Though nine defendants have been charged, only Atilla, who was a deputy general manager at Turkiye Halk Bankasi AS, is being tried, and only Zarrab and Atilla are in U.S. custody.

Zarrab spent four days answering questions from prosecutors seeking to show that Atilla was a linchpin in the scheme. He repeatedly placed Atilla in meetings and conversations about helping Iran tap billions of dollars in revenue from oil sales that couldn’t be otherwise accessed because of strict U.S. sanctions. Prosecutors also played a recorded phone call between Zarrab and Atilla, and introduced a text message in which Atilla was mentioned as a go-to person on the laundering method.

Politely answering Fleming’s questions, Zarrab said he agreed to plead guilty and provide “substantial assistance” to prosecutors in return for leniency at sentencing. He acknowledged that he and Atilla had limited contact with one another and didn’t even like each other much. Zarrab reiterated that Atilla wasn’t among the Turkish officials and executives he bribed to facilitate the scheme.

"Mr. Hakan Atilla never requested any money from me,” Zarrab said.

Pressing the point, Fleming had Zarrab testify that he had no text-message exchanges with Atilla and didn’t have Atilla’s phone number in his phone contacts. Zarrab said that he had far more extensive contact -- Fleming said as many as 1,000 messages -- with Suleyman Aslan, the former chief executive of Halkbank who he previously said he bribed.

Zarrab said he refused to meet with Atilla’s lawyers to discuss the evidence after he agreed to cooperate, partly because he was angry about statements they made about him in court filings. He also acknowledged complaining about Atilla to Aslan.

Miami Arrest

Zarrab was arrested in Miami in March 2016. He testified that his lawyers first approached the government seeking a cooperation deal in August 2016, but didn’t hammer one out for a year. Since then, he has met with prosecutors more than 35 times, according to Fleming.

In between his first approach to the government and the start of his cooperation, Zarrab said, he hired ex-New York City Mayor Rudy Giuliani and former U.S. Attorney General Michael Mukasey, both allies of President Donald Trump, to get his case dismissed through diplomatic channels. They weren’t successful.

"Within the bounds of the law, they did make efforts, that is correct," he said.

Zarrab also admitted paying $45,000 in bribes, carried by one of his Turkish lawyers, to a guard in a federal jail in Brooklyn where he was confined before trial. In exchange, the guard brought him alcohol and Dayquil when he was sick, and allowed Zarrab to use his cell phone.

The phone was used to to call his wife, daughter, uncle, sister and one of his lawyers, Zarrab said. Those calls weren’t recorded by the government, in contrast with calls that are officially permitted. Separately, he also admitted smoking synthetic marijuana in jail.

©2017 Bloomberg L.P.