A Turkish-Iranian gold trader whose prosecution has been a major source of tension between the U.S. and Turkey, pleaded guilty and will testify against his former co-defendant, a high-level executive at the Turkey-owned bank, Halkbank.
Prosecutors disclosed in a New York City federal court on Tuesday that Reza Zarrab will testify as early as Tuesday afternoon against Mehmet Hakan Atilla, the Halkbank executive.
Zarrab, 34, was accused of aiding an oil-for-gold conspiracy aimed at skirting sanctions against Iran.
The case has roiled Turkish society because of its possible implications for Turkey’s president, Recep Tayyip Erdogan, and his family. It is widely believed that Zarrab has information that will show that the Erdogan family and Turkish government officials were involved in the sanctions-busting conspiracy. Prosecutors have referenced secret recordings in which Zarrab discusses conversations he had with Erdogan and contributions he planned to make to Erdogan family projects.
Any revelation of Erdogan’s involvement in the scheme would wear down the already frayed relationship between the U.S. and Turkey, who are NATO allies.
Erdogan has personally pleaded with his American counterparts, both President Trump and President Obama, to release Zarrab. He has also accused federal prosecutors handling the case of working on behalf of Fethullah Gulen, a political foe who Erdogan blames for many of Turkey’s woes.
Prosecutors asked the judge handling the case to unseal Zarrab’s plea agreement.
Earlier this year, Zarrab hired former New York City mayor Rudolph Giuliani and former Attorney General Michael Mukasey onto his legal team. Guiliani’s hiring drew attention because of his close relationship with President Trump. It was reported that the Republican sought a diplomatic resolution to the Zarrab case.
