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24 October 2019

Turkey-US tensions escalate as Halkbank rejects charges

The bank and its US lawyers have refused to accept a legal summons or acknowledge US legal authority in the matter.

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Turkey is snubbing US demands for one of its biggest banks to face charges that it helped Iran evade sanctions amid escalating tensions fueled by Turkey’s incursion into northern Syria, reported Bloomberg.

US prosecutors charged Turkiye Halk Bankasi last week with enabling a sanctions-evasion scheme that helped Iran tap $20 billion in frozen foreign oil sales revenue sitting in foreign bank accounts, at a time when the US was trying to maximise leverage over the country in negotiations to abandon its nuclear programme.

US authorities have been pursuing a criminal case against the bank for at least a year, seeking to impose a massive financial penalty for its role in the scheme. But the case idled for months amid diplomatic wrangling until the charges were filed along with other sanctions last week.

Federal prosecutors with the Manhattan US attorney’s office have now deemed Halkbank a ‘fugitive’ and told US District Judge Richard M. Berman they may seek contempt sanctions if the bank fails to respond to renewed demands for its presence in court. Halkbank has no employees or offices in the US, though it does have a correspondent bank account and shares that are listed and traded as American depositary receipts in US markets.

The judge said he would consider the request but also said he wanted to give the bank two weeks to review the matter and reconsider its position.

Turkey appointed a former Halkbank executive who was convicted in a US trial over the sanctions scheme as the new Chief Executive of Boursa Istanbul. The executive, Mehmet Hakan Atilla, was released from US custody in July 2019.




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