Reza Zarrab was accused in 2013 of bribing senior ministers from
the ruling AKP with cash and lavish gifts as part of a scheme to bypass US
sanctions on Iran. His arrest threatens to reopen a case that reached
right into Mr Erdogan’s inner circle
Laura Pitel
Istanbul / Wednesday 23 March 2016
A Turkish gold trader at the centre of a corruption scandal that
engulfed President Recep Tayyip Erdogan has been arrested in Miami and charged
with laundering millions of dollars.
Reza Zarrab, also known by the name Riza Sarraf, was accused in
2013 of bribing senior ministers from Turkey’s ruling party with cash and
lavish gifts as part of a scheme to bypass US sanctions on Iran.
On Saturday, the 33-year-old was arrested while on holiday in
Florida with his wife and daughter. The arrest was made public late on Monday
night when US prosecutors unsealed an indictment that charged him with
fraud, money-laundering and sanctions-busting.
The arrest threatens to reopen a case that reached right into Mr
Erdogan’s inner circle and to tarnish the party that he founded. It will also
deepen existing tensions between Turkey and the United States. The US attorney
in charge of prosecuting the case, Preet Bharara, became an overnight sensation
after tweeting that Mr Zarrab would “soon face American justice in a Manhattan courtroom”.
Mr Bharara was bombarded with messages of support from Turkey,
where opponents of the government have increasingly turned to social media in
the face of a crackdown on critical news outlets. Mr Zarrab, an Iranian-born
Turkish citizen, was detained and charged in Istanbul in 2013 in a huge
corruption case that posed the biggest challenge to Mr Erdogan, the man
who has dominated Turkish politics for more than a decade as Prime Minister and
then as President.
The allegations centred on a claim that Mr Zarrab was using a
loophole in US sanctions on Iran to buy oil and gas in exchange for gold. The
businessman, who owns a private jet and is married to a Turkish pop star, was
accused of bribing senior ministers in the ruling Justice and Development Party
(AKP) in order to facilitate the transfers.
The gifts were said to include a $37,000 piano, a $350,000 watch
and millions of dollars in cash. Mr Zarrab was allegedly able to call in
favours from ministers that ranged from the release of an impounded plane to a
request for a police escort to help him escape Istanbul’s notorious traffic
jams.
The allegations exploded into the public domain in
December 2013 with a string of high-profile arrests. Three cabinet ministers
resigned after their sons were implicated. Mr Erdogan decried the investigation
as an attempt to overthrow his government by supporters of his
ally-turned-enemy, Islamic cleric Fethullah Gulen. He ordered a huge purge of
police, prosecutors and judges. All charges against Mr Zarrab and those linked
to the government were dropped. Mr Erdogan later described the businessman as a
“philanthropist” whose work had “contributed to the country”.
Lawyers for Mr Zarrab said that the US investigation
had “absolutely no link” with the 2013 scandal. Mr Zarrab has not yet entered a
plea. His lawyer told the Turkish newspaper Hürriyet that the latest
accusations against him “can all be explained”. He is next due in court at the
start of April.
The indictment accuses Mr Zarrab of using a global web of firms
to hide the fact he was conducting transitions for or on behalf of Iranian
entities.
Mr
Bharara has earned a name for himself as someone willing to tackle the big
beasts of Wall Street, as well as corrupt politicians. The backlash against him
began within hours of the announcement of Mr Zarrab’s arrest. The
pro-government newspaper Sabah
used Twitter to share a doctored photograph that supposedly showed
him collecting an award from a charity linked to Mr Gulen, the President’s
arch-foe.
Ryan Gingeras, an academic who has written a book on organised
crime in Turkey, said that American prosecutors “undoubtedly” understood the
political stakes. “The indictment alone will raise tensions between Ankara and
Washington,” he said.
Nigel Kushner, an expert on Iranian sanctions at the firm W
Legal, expected US authorities to seek to prosecute the widest possible network
of offenders. “In these types of situations, one or two whistleblowers will
likely play ball in order to obtain reduced sentences or fines,” he said. “This
will give the US authorities the evidence to help pursue others. The US will
want to send a powerful message. This will likely not be limited in scope.”
Kemal
Kilicdaroglu, head of the opposition Republican People's Party (CHP),
predicted that “all the dirty laundry will come out”. He said: “Many people
won’t sleep a wink tonight.”
