Reza Zarrab: An Economic Jihadist?

“I have never joined the fight for Jihad,” uttered the witness in the dock at a federal court in Manhattan on December 7. Given the number of terrorist prosecutions put forth at this trial, one could be forgiven for thinking this is a terrorism trial, although it's not.

The above statement was made by Reza Zarrab, the Turkish-Iranian billionaire giving evidence in the trial against Turkish banker Mehmet Hakan Atilla, on his seventh and last day of testimony. 

Zarrab was arrested during a family trip to Florida in March 2016 and was charged with conspiracy to violate sanctions against Iran. After a few months, he agreed to enter a guilty plea and cooperate with the prosecution in the hopes that US authorities would apply some leniency in his own case. He took the stand as a US-government witness in the highly publicized trial against Atila, a former deputy manager of Turkey’s Halbank, who is charged with violating the sanctions.

Zarrab’s statement referred to a Persian-language document presented to the court — a letter to a senior official at Iran’s Central Bank that was signed by Zarrab. In it, Zarrab pledged to put his family’s experience in currency trading at the service of “fighting the economic sanctions... in line with the Supreme Leader [Ayatollah Khamenei] naming [that] year the Year of Economic Jihad.” The letter also highlighted Zarrab’s recognition of the “goals and odious behavior of the world-conquering imperialism in creating international sanctions” against Iran. A similar letter, from Zarrab to Iran’s former President Mahmoud Ahmadinejad, had been exhibited at the court two days before. Zarrab testified that he didn’t read Persian and didn’t really know what “economic jihad” was.

Ayatollah Khamenei wasn’t the only prominent name to be mentioned during the trial; the names of several other leading figures from both Iran and Turkey came up too. 

When presenting its case, the prosecution had presented the court with a blackboard that illustrated in elaborate detail the hierarchy of Iranian and Turkish officials involved in the scheme to bypass sanctions and siphon funds. The exhibit was so complex that at times during the trial it resembled the charts shown in action films where hardened detectives try to track down drug barons and criminal masterminds. Throughout the trial, two photographs stayed glued to the very top of the board: Those of Ayatollah Khamenei and Mahmoud Ahmadinejad. 

On the sixth day of the trial, Attila’s lawyer, Cathy Fleming, asked Reza Zarrab if he had ever met Khamenei or Ahmadinejad. Speaking through a Turkish interpreter, he answered in the negative. But he said he had met Mahmoud Bahmani, the head of Iran’s Central Bank from 2009 to 2013, in Tehran, and other Iranian officials in Turkey. 

Each time Zarrab took the stand, economic stakeholders in both Iran and Turkey worried about what was to come. The involvement of Iranian banks including Sarmayeh, Pasargad and Saman repeatedly came up in his testimony. He claimed, for instance, that Sarmayeh pocketed five percent of all transactions, whereas he only received 2.5 percent. He also mentioned attempts to bribe officials in China. Personally, he said, he made “perhaps 150 million dollars” — a number that many have regarded as much lower than the true figure. 

The Zanjani Connection — and the Erdogan One

In Iran, much of the interest in the trial has been about how it connects with the long-running saga of Babak Zanjani, an Iranian billionaire who was last year convicted of multi-billion dollar fraud and sentenced to death in Iran. Zanjani closely collaborated with Zarrab, and his assets in Turkey were reportedly under his name. Iranians have watched the trial with interest, as it promised to reveal corrupt practices in several Iranian public and private institutions. 

In Turkey, the trial has touched the highest echelons of the government. Zarrab suggests that the country’s powerful leader, Recep Tayyib Erdogan, was implicated in the plan to help Iran circumvent sanctions. It is no coincidence that Erdogan personally attacked the court, dismissing it as “artificial,” and claimed that none other than Fethullah Gullen, a Turkish cleric in self-imposed exile in Pennsylvania since 1999, was behind the prosecution. Erdogan blames Gullen for having masterminded the failed coup attempt in 2016. Zarrab’s assets in Turkey have been seized and some of his closest associates and family members have reportedly fled to Iran. 

The trial has certainly not been short of sensational claims and exposes. Yesterday, December 7, Zarrab claimed that, when in a Brooklyn federal jail, an inmate pulled a knife on him and threatened to kill him for cooperating with the prosecution. A day before, an inmate in another jail in Manhattan accused Zarrab of rape. The inmate, whose identity is protected by US regulations regarding sexual offense accusations, is in his early sixties and has pleaded guilty to one count of material support to a terrorist group. He says that Zarrab befriended him and even wired money to his family in Africa but ended up abusing him for months (from November 2016 to March 2017), culminating in rape. The inmate’s lawyer says the fact that these charges have been brought at the same time as Zarrab’s testimony was taking place is pure coincidence. 

For now, Zarrab’s testimony has finished. But the trial continues and questions about the case linger. Many wonder what kind of a deal he has received in return for his cooperation. Turkish media is awash with rumors of how he has benefited from his protection in an unidentified FBI custody house. But why would federal prosecutors offer such a deal to a convicted financial criminal? One Canadian analyst recently raised the possibility that Zarrab’s real “cooperation” is not so much about a case against a paltry Turkish banker, but more about the investigation into former national security advisor Michael Flynn. If this holds any truth, former officials of the Trump administration might soon make an appearance on their own elaborately-illustrated blackboard as this mind-bogglingly transnational affair continues.