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Features

Turkey Seizes the Assets of Reza Zarrab and 22 Others

December 4, 2017
Farzad Razizadeh
5 min read
Zarrab is a key witness in the trial of Turkish banker Mehmet Hakan Atilla, who is also accused of laundering money for Iran between 2010 and 2015
Zarrab is a key witness in the trial of Turkish banker Mehmet Hakan Atilla, who is also accused of laundering money for Iran between 2010 and 2015
Zarrab claims that Turkish President Recep Tayyip Erdogan was involved in his money-laundering operations
Zarrab claims that Turkish President Recep Tayyip Erdogan was involved in his money-laundering operations

On Wednesday, November 29, Iranian-Turkish gold trader Reza Zarrab took the stand in a Manhattan courtroom to testify about his role in bypassing sanctions and money laundering.

During his testimony, Zarrab claimed that Turkish President Recep Tayyip Erdogan had known about and approved his actions. Two days later, the Turkish government retaliated, and, on Friday December 1, Turkish prosecutors ordered the seizure of Zarrab’s assets and the assets of 22 members of his family and associates.

Zarrab is a key witness in the trial of Turkish banker Mehmet Hakan Atilla, who is also accused of laundering money for Iran between 2010 and 2015. During the trial, Zarrab alleged that Erdogan himself was involved in money laundering, and that in one case directly issued an order for illegal transactions to go ahead. On Thursday, Erdogan denied that Turkey had violated the sanctions against Iran and his government branded the New York trial “a plot against Turkey.” And Turkish Prime Minister Binali Yildirim said that he hoped Zarrab would "turn back from his mistake” — meaning that he should withdraw his accusations. 

By seizing Zarrab’s assets, Turkish officials are following the same pattern of behavior they used against the Muslim cleric Fethullah Gulen, who lives in the United States. Turkey has accused him of instigating last year’s attempted coup.

According to Turkish media, the Turkish government seized properties and assets owned by Reza Zarrab worth more than $300 million, including his private jet, estimated to be worth more than $12 million. Also seized were 47 apartments, two floors of office space in one of the most coveted office towers in Istanbul and a number of villas.

The confiscations are not limited to Zarrab’s assets only; 22 of his associates and partners, some of them Iranian, have also had assets seized.

One of these associates is Mohammad Mehdi Jolazadeh, a well-known Iranian resident of Istanbul, the secretary of the Iranian Chamber Society in Istanbul and a shareholder of NAB Holding, which is most active in the Republic of Azerbaijan. The company operates as a dealer for many top automobile outfits, including Hyundai, Jeep and Dodge. Baku Electronics, which sells more than 80 brands of home appliances across Azerbaijan, including Samsung, Siemens, Bosch, Tefal, Nintendo, Moulinex and Canon, is a subsidiary. NAB Holding is a shareholder in the Bank of Baku and also in the Qafqaz (“Caucasus”) Leasing investment company. It is expected that the seizure of Zarrab’s assets is going to affect the activities of  these companies in Turkey and the Republic of Azerbaijan. 

Another shareholder of NAB Holding, Omid Mohaghegh Orumi, has also had assets frozen.

German Ghanbari Arablou, the CEO and founder of the Khazar (“Caspian”) Group, and who has links to Zarrab’s family, also features on the list. The Khazar Group, founded in 1987, is active in various sectors, including the luxury furniture and interior decoration markets. Ali Polat, the director of the company’s construction division, which is active in housing development in Turkey’s big cities, is also named. 

Bahram Dargahi Moghaddam, the chairman of the board of directors of Vala Exchange, one of the best-known currency exchanges in Turkey, is also involved. After Zarrab was arrested in Turkey in 2013 — he was released in 2014 — there were reports that Vala Exchange had been used as one of the main conduits for transferring currency to and from Iran.

Another name on the list is that of Aydin Harazi, chairman of the board of directors of the Middle East Business investment company, and who is active in many sectors including construction, hotel management, and cosmetics imports. Harazi is also the founder of the Turkish Vintage Cars Club and owns a very famous hotel in the Asian part of Istanbul.

Also named is Parviz Laki, the CEO of Jutsan Polipropilen A.S., a company that is deals in textiles, packaging and related markets.

The last name on the list is Babak Nahani, the CEO of the SOS Business Consulting company, which mainly deals with the Iranian market.

A review of the list of targeted individuals shows that the Turkish prosecutor has opened a complex and far-reaching financial case. It is not clear to what degree the asset seizures will affect Reza Zarrab’s testimony, but it clearly shows that the Turkish government is striking back, and is not prepared to let his testimony damage its interests or reputation.

One interesting point is that, although Zarrab’s daughter Alara appears on the list of 22 individuals whose assets have been frozen, there has been no mention of Ebru Gündeş, Zarrab’s wife, who is also a famous Turkish singer and actress. Despite rumors of divorce, legally the couple are still married.  

In his testimony, Zarrab claimed that his sprawling money laundering operations to bypass sanctions on Iran were guided by high-level Turkish and Iranian officials. When he was arrested in Turkey, Turkish media reported that the case against him involved €87 billion and that he had transferred €37 billion from Iran to Turkey. Zarrab also said that his operations received help from three Turkish banks — Halkbank and Agricultural Bank, both state-owned, and VakıfBank, Turkey’s fifth largest bank — as well as Iran’s Central Bank and Iranian banks Mellat and Sarmayeh.

Zarrab’s money-laundering operations involved a variety of tactics and covers. Some of the money was hidden behind trade deals in food items. The biggest cover, of course, was gold trading. Zarrab received the proceeds from Iran’s sale of oil, gas and petrochemicals from Halkbank, converted them to gold and then transferred the gold to Dubai. In Dubai he converted the gold into the United Arab Emirates’ currency the dirham. He then used the currency exchange to pay off Iranian and foreign companies that were owed money by the Iranian government for exports to Iran.

The cost of all these transactions was borne by the government of the Islamic Republic and Zarrab got his share.

Zarrab claims that he shared his profits with Turkish officials. In just one instance, he says that he paid former Turkish Economy Minister Zafar Caglayan €50 million. In two other instances he claims that he paid Caglayan $7 million and 204 million Turkish liras, respectively. Other specifics of his bribes to Turkish officials and his profit-sharing arrangements with them is yet to be published.

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